THOMPSON amp KNIGHT LLP AUSTIN

ATTORNEYS AND COUNSELORS DALLAS

FORT WORTH HOUSTON

ONE ARTS PLAZA LOS ANGELES

WILLIAM SCHUERGER

DIRECT DIAL (214) 969-1369 EMAIL WillieSchuergerlklawcom

1722 ROUTH STREET bull SUITE 1500 DALLAS TEXAS 75201

2149691700 FAX 2149691751

NEW YORK

ALGIERS LONDON

wwwtklawcom MEXICO CITY MONTERREY

PARIS

December 2 2016

Office of Chief Counsel Division of Investment Management Securities and Exchange Commission 100 F Street NE Washington DC 20549

Attn Ms Nadya B Roytblat Esq Mr James M Curtis Esq Mr Kieran G Brown Esq

Re Liquidating Trust and Related Entity to be Created in Connection with Bankruptcy-Related Dissolution of Life Partners Holdings Inc Life Partners Inc and LPI Financial Services Inc

Dear Ms Roytblat and Messrs Curtis and Brown

On behalf of H Thomas Moran II as the Chapter 11 trustee (the Trustee) for Life Partners Holdings Inc (LPHr) and the sole director of Life Partners Inc (LPr) and LPI Financial Services Inc (LPIFS and collectively with LPHI and LPI the Debtors) we respectfully request that the staff of the Division of Inves_tment Management (the Staff) confirm that it will not recommend any enforcement action to the Securities and Exchange Commission (the SEC) if (i) a liquidating trust (defined elsewhere herein as the Position Holder Trust) and (ii) a related entity (defined elsewhere herein as the IRA Partnership) to be created pursuant to the reorganization transactions contemplated by the Revised Third Amended Plan of Reorganization dated October 27 2016 (the Plan) filed by the Trustee the Debtors and the Official Committee of Unsecured Creditors (the Committee) appointed in the Debtors bankruptcy cases (collectively the Plan Proponents) under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) do not register as investment companies under the Investment Company Act of 1940 as amended (the 1940 Act) in reliance on the exemptions in Sections 7(a) and 7(b) of the 1940 Act for transactions which are merely incidental to the dissolution of an investment company

1 A copy of the Plan is attached hereto as Exhibit A

522202 000003 186848634

I Background

A The Debtors the Bankruptcy Proceedings and Related Matters

The Debtors

LPHI is a holding company and the parent company of LPI which is a specialty financial services company From 1991 until2014 LPI was engaged in the business of (i) acting as a life settlement provider in purchasing individual life insurance policies from third parties (the Policies) and (ii) raising money to purchase the Policies by selling investment contracts to investors (the Investors) including investors who purchased their investments through their individual retirement accounts (the IRA Holders) The investment contracts were denominated as fractional interests in the Policies (Fractional Interests) or promissory notes relating to Fractional Interests (IRA Notes and together with the Fractional Interests the Fractional Positions) LPIFS which is wholly-owned by LPI was formed as a vehicle to bill and collect certain fees charged to Investors in connection with LPIs activities

Prior to the bankruptcy filings described herein LPHI and LPI were defendants in numerous lawsuits commenced by the SEC the State of Texas and certain Investors who purchased Fractional Positions which alleged that LPHI and LPI had violated various federal and state securities laws in connection with the Debtors activities including with respect to the sale of Fractional Positions to the Investors In December 2014 the SEC obtained a $387

I

million judgment against LPHI in connection with its lawsuit

The Bankruptcy Proceedings

On January 20 2015 LPHI filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas (the Bankruptcy Court) to avoid enforcement of the SECs judgment On March 19 2015 the Bankruptcy Court granted a motion filed by the SEC and supported by the US Trustees Office and appointed H Thomas Moran II as the Trustee for LPHI

Pursuant to further orders of the Bankruptcy Court Mr Moran was appointed as the sole director of each of LPI and LPIFS On May 19 2015 LPI and LPIFS filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court and with the approval ofthe Bankruptcy Court the Debtors cases are being jointly administered

Related Matters

In May 2015 the Texas Supreme Court issued an opinion holding that the Fractional Positions sold by LPI are securities under Texas law and that LPI is the legal owner of the Policies Based in part on that decision the Trustee has asserted that the Policies are assets of the Debtors estates However in the earlier proceedings of the Debtors Chapter 11 cases many parties in interest vigorously contested that position and as a result there has been uncertainty as to the extent of LPI s equitable (or beneficial) ownership of the Policies The resulting issue has been referred to as the Ownership Issue

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B The Plan and the Entities to be Created Pursuant to the Plan

The Plan

The Debtors Chapter 11 bankruptcy cases have been designated by the Bankruptcy Court as complex Chapter 11 cases The Debtors have over 90000 creditors and parties in interest and control almost 3400 Policies with an aggregate face amount of approximately $23 billion There are approximately 22000 Current Position Holders (as defined below) and over 100000 outstanding Fractional Positions

During the course of the Debtors Chapter 11 bankruptcy cases the Trustee has been in negotiations with numerous parties over numerous issues including the Ownership Issue and the path to reorganization To resolve the Ownership Issue the Trustee and the Debtors have negotiated a settlement agreement of pending class action litigation (the Class Action Settlement) pursuant to which Investors who currently hold Fractional Positions (collectively the Current Position Holders) will be provided with choices under the Plan for the treatment of their claims against the Debtors relating to their Fractional Positions The Class Action Settlement has been approved by both the Bankruptcy Court and the US District Court for the Northern District of Texas

On June 24 2016 the Bankruptcy Court approved the Disclosure Statement for the Plan (the Disclosure Statement) and authorized the Plan Proponents to solicit votes on the Plan A copy of the Disclosure Statement is enclosed herewith as Exhibit B On November 1 2016 the Bankruptcy Court entered its order confirming the Plan (the Confirmation Order) and a copy of the Confirmation Order is enclosed herewith as Exhibit C

Entities to be Created Pursuant to the Plan

Under the Plan the following three (or four) new legal entities will be created to implement the provisions of the Plan and to take required actions under the Plan

(1) The Position Holder Trust- Life Partners Position Holder Trust (the Position Holder Trust) is a liquidating trust which will

bull Own legal title to and all beneficial and equitable title not represented by Continuing Fractional Interests (as defined below) in almost 3400 Policies purchased by LPI in life settlement transactions using the proceeds from LPI s sale of Fractional Positions preserve and liquidate those Policy assets2

2 With respect to the liquidation of the Policies (or any Fractional Interests in any of the Policies) it is important to highlight that the Position Holder Trust will not be actively seeking to sell the Policies (or any Fractional Interests) and in most cases will likely have to hold the Policies (and its Fractional Interests therein) until maturity (ie the death of the insured) The reasons for this relate to the following factors

The fractional ownership model for life settlement policies makes it impossible to sell an entire Policy without the consent (and participation) of all owners of Continuing Fractional Interests thus making the sale process very cumbersome and expensive

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including through a servicing contract with or its ownership of the Servicing Company (as defined below) and its ownership of the stock of LPI as a reorganized Debtor3 (Reorganized LPr) after the Plan becomes effective and distribute the liquidating proceeds of those assets to holders of Position Holder Trust Interests (as defined below)

bull Issue beneficial interests in the Position Holder Trust (the Position Holder Trust Interests) in satisfaction of claims against LPI to (a)(i) the current holders of Fractional Positions denominated as Fractional Interests who make

Under the Class Action Settlement and the Plan the Position Holder Trust will not have the right to sell a Policy out from under the Continuing Fractional Holders

In most liquidations ownership of the assets held by the liquidating trust are not in question (ie the liquidating trust can sell 100 of the assets held by it without anyone elses consent) Here absent the Class Action Settlement (and the compromise of the Ownership Issue embodied therein) there would remain an active adversarial dispute over ownership of the Policies making it virtually impossible to sell most Policies and in turn the Debtors Chapter 11 bankruptcy proceedings would likely have to be converted into a Chapter 7 liquidation (which would lead to the lapse of many Policies and the concomitant loss of significant value)

The key benefit of being a holder of a Fractional Interest is the possibility of a payout of 100 ofthe death benefit (face amount) associated with the Fractional Interest upon maturity of the Policy Preserving the fractional ownership model (the right to continue to hold such a lottery ticket) is a cornerstone of the Class Action Settlement and the Plan

The Plan Proponents believe that the best way to maximize recoveries by the defrauded Investors who make up the vast majority of the creditors of the Debtors bankruptcy estate is to allow the portfolio of Policies to liquidate through maturity (ie a portfolio run-off) which will maximize the cash flow available to provide returns to the Investors

Sales of life settlement policies never generate 100 of face amount and many policies generate less than 10 of face amount some only 1 or 2 ifthey can be sold at all

Although the Position Holder Trust will have authority to sell its fractional share of beneficial ownership in a Policy (ie the Fractional Interest) it will not be actively seeking to sell Fractional Interests for the same reasons it will not be actively seeking to sell Policies Fractional Interests can be even harder to sell than entire Policies and when they can be sold they generally sell at an even greater discount to face amount thereof given they are minority interests and subject to additional risks (eg the risk of lapse if any of the other fractional owners decides to stop paying its share of premiums the inability to communicate with the insurance company regarding the Policy (as only the owner oflegal title to the Policy has that right) etc)

The Trustees projections (included in the Disclosure Statement) reflect that over time it is anticipated that the Position Holder Trust will return more than 50 of face value to those Investors who make Position Holder Trust Elections which will amount to approximately 90 of invested capital The recovery will be increased by any litigation recoveries in excess of the amount needed to pay general unsecured creditors and any cost savings from the reserves included in the projections (primarily savings in expenses reserved for securities compliance and investor protections)

3 Certain activities conducted in servicing the Policies can only be performed with a life settlement license from the Texas Department of Insurance and similar licenses from comparable regulatory bodies in other states and LPI currently possesses the required licenses To the extent necessary after the Plan becomes effective Reorganized LPI will continue to conduct those activities pursuant to its licenses while the new Servicing Company obtains its own to the extent required

4 522202 000003 186848634

either a Continuing Holder Election or a Position Holder Trust Election (each as defined below) and (ii) IRA Holders who make a Conversion Election (as defined below) to receive a Fractional Interest and (b) the IRA Partnership (as defined below) with respect to Investors who (i) are IRA Holders and (ii) make a Continuing Holder Election or a Position Holder Trust Election

bull Issue new secured promissory notes (New IRA Notes) in satisfaction of claims against LPI to IRA Holders who make a Continuing Holder Election and

bull In addition to distributing the liquidating proceeds of the assets contributed to it as provided in the Plan distribute to the holders of Position Holder Trust Interests any funds received by it as the residual beneficiary of the Creditors Trust (as defined below) and proceeds of any Fractional Interests assigned to the Position Holder Trust as a result of the prosecution of the causes of action assigned to the Creditors Trust (Recovered Assets) or as part of any contribution to be made to the Creditors Trust by the SEC as a result of its actions against the former management of the Debtors and other parties involved in the pre-bankruptcy fraud scheme (Fair Funds)

(2) The IRA Partnership - Life Partners IRA Partnership LLC (the IRA Partnerstip) will (a) issue limited liability company interests (the IRA Partnerstip Interests) in satisfaction of claims against LPI to IRA Holders who make a Continuing Holder Election or a Position Holder Trust Election and (b) hold Position Holder Trust Interests issued under the Plan with respect to those elections

(3) The Creditors Trust- Life Partners Creditors Trust (the Creditors Trust) will (a) pursue litigation and other causes of action assigned to it under the Plan and (b) distribute the net proceeds collected by it to the holders of interests in the Creditors Trust (the Creditors Trust Interests) which will consist of the current holders of Fractional Positions who make a Creditors Trust Election (as defined below) and other holders of allowed general unsecured claims against LPI including the SEC in satisfaction of its judgment claim against LPHI4 As discussed above the Position Holder Trust will have a residual interest in the Creditors Trust including with respect to any Fair Funds contributed to the Creditors Trust by the SEC from its actions against the former management of the Debtors and other parties involved in the pre-bankruptcy fraud scheme

(4) The Servicing Company - The Plan contemplates that a third party Vida Capital Inc (Vida) will act as the servicing company (the Servicing Company) to (a) provide services in connection with the maintenance and collection of benefits of the Policies after the effective date of the Plan (the Effective Date) and (b) provide investor account and other administrative

4 Under the Plan and Creditors Trust Agreement distributions allocated to the SECs Creditors Trust Interest will be reallocated and distributed to Investors who are holders of Creditors Trust Interests and after those Investors receive a full recovery to the Position Holder Trust for distribution to its beneficiaries all of whom are Investors

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services to the Position Holder Trust and the Continuing Position Holders relating to the Continuing Fractional Interests and New IRA Notes outstanding after the Effective Date (together the Continuing Positions with the holders thereof referred to as the Continuing Position Holders) as well as the outstanding Position Holder Trust Interests and IRA Partnership Interests including maintaining or engaging a third party to maintain the ownership registers for the Continuing Fractional Interests Position Holder Trust Interests and IRA Partnership Interests (collectively New Interests) and the New IRA Notes If for any reason Vida does not act as the Servicing Company a new subsidiary whollymiddot owned by the Position Holder Trust (Newco) will be formed to act in that capacity and until Newcos formation is completed and it has obtained all necessary licenses Reorganized LPI will act as the Servicing Company5

Election Options under the Plan

The Plan contains a feature that allows Current Position Holders to elect which treatment they would like under the Plan for their claims related to their Fractional Positions For each Fractional Position held a Current Position Holder generally may choose one of three (or four with respect to IRA Holders) alternative elections to be effective on the Effective Date as summarized below 6

Option 1 Continuing Holder Election - A Current Position Holder may elect to become a Continuing Position Holder with respect to a Fractional Position The holder of a Fractional Interest that elects this option will (a) receive confirmed status as the owner of 95 of the Fractional Interest with respect to which the election was made (a Continuing Fractional Holder of a Continuing Fractional Interest) (b) make a contribution of the remaining 5 of the Fractional Interest (a Continuing Position

5 During the bankruptcy proceedings the Plan Proponents negotiated a term sheet with Vida a copy if which is attached to the Disclosure Statement as Exhibit G (the Vida Term Slteef) Since then they have negotiated a defmitive Vida Plan Collaboration Agreement (the Vida Plan Collaboration Agreement) providing for the transactions contemplated by the Vida Term Sheet and the Vida Plan Collaboration Agreement was approved by the Bankruptcy Court in the Confirmation Order Under the Vida Plan Collaboration Agreement Vida has committed to provide the fmancing necessary to implement the transactions contemplated by the Plan to occur on the Effective Date If the transactions under the Vida Plan Collaboration Agreement are not completed for any reason such fmancing will be provided in the form of the Maturity Funds Facility as provided for in the Plan which is the same source of fmancing previously approved by the Bankruptcy Court unless replaced by another source of exit fmancing provided by a third-party other than Vida The fmancing provided by Vida will accelerate distribution of pre-Effective Date maturity proceeds following the Effective Date a result argued for by several interested parties In addition Vida will purchase the right to provide services as the Servicing Company in exchange for the servicing fee provided for under the Plan Vida has all life settlement licenses required to conduct all of the activities necessary in providing services under the servicing agreement with the Position Holder Trust As a result if Vida is the Servicing Company as anticipated it will not be necessary to form Newco or obtain life settlement licenses for it

6 Under the Plan current holders of Fractional Interests who make no election will be treated as having made a Continuing Holder Election Current IRA Holders who make no election will be treated as having made a Position Holder Trust Election

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Holder Contributionf to the Position Holder Trust in exchange for a Position Holder Trust Interest and (c) have responsibility to pay all premiums and other charges (including servicing fees) related to the Continuing Fractional Interest after the Effective Date An IRA Holder that elects this option (a Continuing IRA Holder) will (a) receive a New IRA Note issued by the Position Holder Trust in exchange for the Investors allowed claim against the Debtors relating to the Fractional Position (b) make a Continuing Position Holder Contribution to the IRA Partnership (which will in turn be contributed by the IRA Partnership to the Position Holder Trust) and (c) be relieved of all future obligations to pay any premiums or other required charges after the Effective Date related to the Fractional Position or any of the Policy interests pledged as collateral for the New IRA Notes

Option 2 Position Holder Trust Election - A Current Position Holder may elect to become the holder of a Position Holder Trust Interest or IRA Partnership Interest (an Assigning Position Holder) by contributing 100 of a Fractional Position to the Position Holder Trust (directly or through the IRA Partnership) A holder electing this option for a Fractional Position will (a) either (i) exchange a Fractional Interest for a Position Holder Trust Interest (an Assigning Fractional Holder) or (ii) exchange an IRA Note for an IRA Partnership Interest (an Assigning IRA Holder) and (b) be relieved from responsibility to pay premiums or other required charges related to the Fractional Position exchanged

Option 3 Creditors Trust Election - A Current Position Holder may elect to rescind the purchase of a Fractional Position and thereby become the holder of a Creditors Trust Interest (a Rescinding Position Holder) and be entitled to share in distributions from the Creditors Trust

Option 4 Conversion Election - In addition to the three options listed above a current IRA Holder will have a fourth option (the Conversion Election) which entails (a) a distribution of the IRA Note to the individual owner thereof in exchange for a Fractional Interest owned outside of an individual retirement account and (b) a Continuing Holder Election by the individual owner with respect to the Fractional Interest (who will thereby become a Continuing Fractional Holder) 8

Management Structure ofthe Position Holder Trust and the IRA Partnership

The trustee of the Position Holder Trust (the PHT Trustee) will administer and manage the assets of the trust consistent with the terms of the Plan and the Position Holder Trust Agreement (the PHT Agreement) The Plan Proponents proposed Mr Eduardo S Espinosa to

7 The 5 Continuing Position Holder Contribution is an integral part of the Plan and the Class Action Settlement which is incorporated into the Plan

8 By making the Continuing Holder Election the individual owner will be subject to the same consequences as a Current Position Holder as described above including making the 5 Continuing Position Holder Contribution

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serve as the PHT Trustee 9 The PHT Trustee will also serve as the sole manager of the IRA Partnership The Confirmation Order approves Mr Espinosa serving as both PHT Trustee and manager of the IRA Partnership

The Position Holder Trust will also have a trust board (the Trust Board) composed of five members who are not interested persons of the Debtors or the Position Holder Trust as defined in Section 2(a)(l9) of the 1940 Act with duties and obligations as specified in the PHT Agreement The initial members of the Trust Board as approved in the Confirmation Order include the three individual Investors who currently serve as the members of the Committee and two other individuals designated by the Plan Proponents both of whom have relevant experience in the life settlement industry In addition to meeting and consulting with the PHT Trustee regarding the administration of the trust the Trust Board will have authority to approve certain Major Decisions specified in the PHT Agreement including among other things approval of proposed monthly budgets proposed disposition of any Policy interest or other assets distributions to beneficiaries borrowings and decisions to stop paying premiums on any Policy

Compensation to be Paid by the Position Holder Trust and the IRA Partnership

The table below sets forth a description of the compensation for services and other expenses that the Position Holder Trust and the IRA Partnership would pay subsequent to the Effective Date the general amounts thereof to whom such amounts would be paid and who would be responsible for approving the payment of such amounts 10

Payer Obligation Amount Payee AIroval

Position Holder Trust

Premiums on the Policies11

As required by the Policies

Various insurance carriers

Insurance carriers and state regulatory authorities as applicable

Position Holder Trust

Servicing fees 12 265 ofmaturity proceeds of each Policy paid upon maturity thereof

Servicing Company Bankruptcy Court by confirmation of the Plan

Position Holder Compensation of the $400 per hour plus The PHT Trustee Bankruptcy Court

9 Mr Espinosa was selected after an interview process conducted by the Plan Proponents He is currently serving as the receiver in the Retirement Value LLC receivership proceeding which also involves a life settlement portfolio For more information about Mr Espinosa and the Retirement Value LLC receivership proceeding please see wwwrvllcreceivershipcom

10 The fees and expenses of the Position Holder Trust and the IRA Partnership will be funded out of the Position Holder Trusts share of the portfolio cash flow produced by the Policies as detailed in Exhibits C and D to the Disclosure Statement Projected cash flows have been updated to reflect actual elections made by Current Position Holders and other events that have occurred since the Disclosure Statement was filed in June 2016 and introduced into evidence during the confirmation hearing The projected cash flows are not materially different from those set forth in the Disclosure Statement exhibits

11 Continuing Fractional Holders will be obligated to pay their pro rata share of premiums which will be collected by the Servicing Company

12 Continuing Fractional Holders will be obligated to pay servicing fees on their pro rata share of maturities which will be paid to the Servicing Company out of the maturity proceeds when collected

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I Background

A The Debtors the Bankruptcy Proceedings and Related Matters

The Debtors

LPHI is a holding company and the parent company of LPI which is a specialty financial services company From 1991 until2014 LPI was engaged in the business of (i) acting as a life settlement provider in purchasing individual life insurance policies from third parties (the Policies) and (ii) raising money to purchase the Policies by selling investment contracts to investors (the Investors) including investors who purchased their investments through their individual retirement accounts (the IRA Holders) The investment contracts were denominated as fractional interests in the Policies (Fractional Interests) or promissory notes relating to Fractional Interests (IRA Notes and together with the Fractional Interests the Fractional Positions) LPIFS which is wholly-owned by LPI was formed as a vehicle to bill and collect certain fees charged to Investors in connection with LPIs activities

Prior to the bankruptcy filings described herein LPHI and LPI were defendants in numerous lawsuits commenced by the SEC the State of Texas and certain Investors who purchased Fractional Positions which alleged that LPHI and LPI had violated various federal and state securities laws in connection with the Debtors activities including with respect to the sale of Fractional Positions to the Investors In December 2014 the SEC obtained a $387

I

million judgment against LPHI in connection with its lawsuit

The Bankruptcy Proceedings

On January 20 2015 LPHI filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas (the Bankruptcy Court) to avoid enforcement of the SECs judgment On March 19 2015 the Bankruptcy Court granted a motion filed by the SEC and supported by the US Trustees Office and appointed H Thomas Moran II as the Trustee for LPHI

Pursuant to further orders of the Bankruptcy Court Mr Moran was appointed as the sole director of each of LPI and LPIFS On May 19 2015 LPI and LPIFS filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court and with the approval ofthe Bankruptcy Court the Debtors cases are being jointly administered

Related Matters

In May 2015 the Texas Supreme Court issued an opinion holding that the Fractional Positions sold by LPI are securities under Texas law and that LPI is the legal owner of the Policies Based in part on that decision the Trustee has asserted that the Policies are assets of the Debtors estates However in the earlier proceedings of the Debtors Chapter 11 cases many parties in interest vigorously contested that position and as a result there has been uncertainty as to the extent of LPI s equitable (or beneficial) ownership of the Policies The resulting issue has been referred to as the Ownership Issue

2 522202 000003 186848634

B The Plan and the Entities to be Created Pursuant to the Plan

The Plan

The Debtors Chapter 11 bankruptcy cases have been designated by the Bankruptcy Court as complex Chapter 11 cases The Debtors have over 90000 creditors and parties in interest and control almost 3400 Policies with an aggregate face amount of approximately $23 billion There are approximately 22000 Current Position Holders (as defined below) and over 100000 outstanding Fractional Positions

During the course of the Debtors Chapter 11 bankruptcy cases the Trustee has been in negotiations with numerous parties over numerous issues including the Ownership Issue and the path to reorganization To resolve the Ownership Issue the Trustee and the Debtors have negotiated a settlement agreement of pending class action litigation (the Class Action Settlement) pursuant to which Investors who currently hold Fractional Positions (collectively the Current Position Holders) will be provided with choices under the Plan for the treatment of their claims against the Debtors relating to their Fractional Positions The Class Action Settlement has been approved by both the Bankruptcy Court and the US District Court for the Northern District of Texas

On June 24 2016 the Bankruptcy Court approved the Disclosure Statement for the Plan (the Disclosure Statement) and authorized the Plan Proponents to solicit votes on the Plan A copy of the Disclosure Statement is enclosed herewith as Exhibit B On November 1 2016 the Bankruptcy Court entered its order confirming the Plan (the Confirmation Order) and a copy of the Confirmation Order is enclosed herewith as Exhibit C

Entities to be Created Pursuant to the Plan

Under the Plan the following three (or four) new legal entities will be created to implement the provisions of the Plan and to take required actions under the Plan

(1) The Position Holder Trust- Life Partners Position Holder Trust (the Position Holder Trust) is a liquidating trust which will

bull Own legal title to and all beneficial and equitable title not represented by Continuing Fractional Interests (as defined below) in almost 3400 Policies purchased by LPI in life settlement transactions using the proceeds from LPI s sale of Fractional Positions preserve and liquidate those Policy assets2

2 With respect to the liquidation of the Policies (or any Fractional Interests in any of the Policies) it is important to highlight that the Position Holder Trust will not be actively seeking to sell the Policies (or any Fractional Interests) and in most cases will likely have to hold the Policies (and its Fractional Interests therein) until maturity (ie the death of the insured) The reasons for this relate to the following factors

The fractional ownership model for life settlement policies makes it impossible to sell an entire Policy without the consent (and participation) of all owners of Continuing Fractional Interests thus making the sale process very cumbersome and expensive

3 522202 000003 186848634

including through a servicing contract with or its ownership of the Servicing Company (as defined below) and its ownership of the stock of LPI as a reorganized Debtor3 (Reorganized LPr) after the Plan becomes effective and distribute the liquidating proceeds of those assets to holders of Position Holder Trust Interests (as defined below)

bull Issue beneficial interests in the Position Holder Trust (the Position Holder Trust Interests) in satisfaction of claims against LPI to (a)(i) the current holders of Fractional Positions denominated as Fractional Interests who make

Under the Class Action Settlement and the Plan the Position Holder Trust will not have the right to sell a Policy out from under the Continuing Fractional Holders

In most liquidations ownership of the assets held by the liquidating trust are not in question (ie the liquidating trust can sell 100 of the assets held by it without anyone elses consent) Here absent the Class Action Settlement (and the compromise of the Ownership Issue embodied therein) there would remain an active adversarial dispute over ownership of the Policies making it virtually impossible to sell most Policies and in turn the Debtors Chapter 11 bankruptcy proceedings would likely have to be converted into a Chapter 7 liquidation (which would lead to the lapse of many Policies and the concomitant loss of significant value)

The key benefit of being a holder of a Fractional Interest is the possibility of a payout of 100 ofthe death benefit (face amount) associated with the Fractional Interest upon maturity of the Policy Preserving the fractional ownership model (the right to continue to hold such a lottery ticket) is a cornerstone of the Class Action Settlement and the Plan

The Plan Proponents believe that the best way to maximize recoveries by the defrauded Investors who make up the vast majority of the creditors of the Debtors bankruptcy estate is to allow the portfolio of Policies to liquidate through maturity (ie a portfolio run-off) which will maximize the cash flow available to provide returns to the Investors

Sales of life settlement policies never generate 100 of face amount and many policies generate less than 10 of face amount some only 1 or 2 ifthey can be sold at all

Although the Position Holder Trust will have authority to sell its fractional share of beneficial ownership in a Policy (ie the Fractional Interest) it will not be actively seeking to sell Fractional Interests for the same reasons it will not be actively seeking to sell Policies Fractional Interests can be even harder to sell than entire Policies and when they can be sold they generally sell at an even greater discount to face amount thereof given they are minority interests and subject to additional risks (eg the risk of lapse if any of the other fractional owners decides to stop paying its share of premiums the inability to communicate with the insurance company regarding the Policy (as only the owner oflegal title to the Policy has that right) etc)

The Trustees projections (included in the Disclosure Statement) reflect that over time it is anticipated that the Position Holder Trust will return more than 50 of face value to those Investors who make Position Holder Trust Elections which will amount to approximately 90 of invested capital The recovery will be increased by any litigation recoveries in excess of the amount needed to pay general unsecured creditors and any cost savings from the reserves included in the projections (primarily savings in expenses reserved for securities compliance and investor protections)

3 Certain activities conducted in servicing the Policies can only be performed with a life settlement license from the Texas Department of Insurance and similar licenses from comparable regulatory bodies in other states and LPI currently possesses the required licenses To the extent necessary after the Plan becomes effective Reorganized LPI will continue to conduct those activities pursuant to its licenses while the new Servicing Company obtains its own to the extent required

4 522202 000003 186848634

either a Continuing Holder Election or a Position Holder Trust Election (each as defined below) and (ii) IRA Holders who make a Conversion Election (as defined below) to receive a Fractional Interest and (b) the IRA Partnership (as defined below) with respect to Investors who (i) are IRA Holders and (ii) make a Continuing Holder Election or a Position Holder Trust Election

bull Issue new secured promissory notes (New IRA Notes) in satisfaction of claims against LPI to IRA Holders who make a Continuing Holder Election and

bull In addition to distributing the liquidating proceeds of the assets contributed to it as provided in the Plan distribute to the holders of Position Holder Trust Interests any funds received by it as the residual beneficiary of the Creditors Trust (as defined below) and proceeds of any Fractional Interests assigned to the Position Holder Trust as a result of the prosecution of the causes of action assigned to the Creditors Trust (Recovered Assets) or as part of any contribution to be made to the Creditors Trust by the SEC as a result of its actions against the former management of the Debtors and other parties involved in the pre-bankruptcy fraud scheme (Fair Funds)

(2) The IRA Partnership - Life Partners IRA Partnership LLC (the IRA Partnerstip) will (a) issue limited liability company interests (the IRA Partnerstip Interests) in satisfaction of claims against LPI to IRA Holders who make a Continuing Holder Election or a Position Holder Trust Election and (b) hold Position Holder Trust Interests issued under the Plan with respect to those elections

(3) The Creditors Trust- Life Partners Creditors Trust (the Creditors Trust) will (a) pursue litigation and other causes of action assigned to it under the Plan and (b) distribute the net proceeds collected by it to the holders of interests in the Creditors Trust (the Creditors Trust Interests) which will consist of the current holders of Fractional Positions who make a Creditors Trust Election (as defined below) and other holders of allowed general unsecured claims against LPI including the SEC in satisfaction of its judgment claim against LPHI4 As discussed above the Position Holder Trust will have a residual interest in the Creditors Trust including with respect to any Fair Funds contributed to the Creditors Trust by the SEC from its actions against the former management of the Debtors and other parties involved in the pre-bankruptcy fraud scheme

(4) The Servicing Company - The Plan contemplates that a third party Vida Capital Inc (Vida) will act as the servicing company (the Servicing Company) to (a) provide services in connection with the maintenance and collection of benefits of the Policies after the effective date of the Plan (the Effective Date) and (b) provide investor account and other administrative

4 Under the Plan and Creditors Trust Agreement distributions allocated to the SECs Creditors Trust Interest will be reallocated and distributed to Investors who are holders of Creditors Trust Interests and after those Investors receive a full recovery to the Position Holder Trust for distribution to its beneficiaries all of whom are Investors

5 522202 000003 186848634

services to the Position Holder Trust and the Continuing Position Holders relating to the Continuing Fractional Interests and New IRA Notes outstanding after the Effective Date (together the Continuing Positions with the holders thereof referred to as the Continuing Position Holders) as well as the outstanding Position Holder Trust Interests and IRA Partnership Interests including maintaining or engaging a third party to maintain the ownership registers for the Continuing Fractional Interests Position Holder Trust Interests and IRA Partnership Interests (collectively New Interests) and the New IRA Notes If for any reason Vida does not act as the Servicing Company a new subsidiary whollymiddot owned by the Position Holder Trust (Newco) will be formed to act in that capacity and until Newcos formation is completed and it has obtained all necessary licenses Reorganized LPI will act as the Servicing Company5

Election Options under the Plan

The Plan contains a feature that allows Current Position Holders to elect which treatment they would like under the Plan for their claims related to their Fractional Positions For each Fractional Position held a Current Position Holder generally may choose one of three (or four with respect to IRA Holders) alternative elections to be effective on the Effective Date as summarized below 6

Option 1 Continuing Holder Election - A Current Position Holder may elect to become a Continuing Position Holder with respect to a Fractional Position The holder of a Fractional Interest that elects this option will (a) receive confirmed status as the owner of 95 of the Fractional Interest with respect to which the election was made (a Continuing Fractional Holder of a Continuing Fractional Interest) (b) make a contribution of the remaining 5 of the Fractional Interest (a Continuing Position

5 During the bankruptcy proceedings the Plan Proponents negotiated a term sheet with Vida a copy if which is attached to the Disclosure Statement as Exhibit G (the Vida Term Slteef) Since then they have negotiated a defmitive Vida Plan Collaboration Agreement (the Vida Plan Collaboration Agreement) providing for the transactions contemplated by the Vida Term Sheet and the Vida Plan Collaboration Agreement was approved by the Bankruptcy Court in the Confirmation Order Under the Vida Plan Collaboration Agreement Vida has committed to provide the fmancing necessary to implement the transactions contemplated by the Plan to occur on the Effective Date If the transactions under the Vida Plan Collaboration Agreement are not completed for any reason such fmancing will be provided in the form of the Maturity Funds Facility as provided for in the Plan which is the same source of fmancing previously approved by the Bankruptcy Court unless replaced by another source of exit fmancing provided by a third-party other than Vida The fmancing provided by Vida will accelerate distribution of pre-Effective Date maturity proceeds following the Effective Date a result argued for by several interested parties In addition Vida will purchase the right to provide services as the Servicing Company in exchange for the servicing fee provided for under the Plan Vida has all life settlement licenses required to conduct all of the activities necessary in providing services under the servicing agreement with the Position Holder Trust As a result if Vida is the Servicing Company as anticipated it will not be necessary to form Newco or obtain life settlement licenses for it

6 Under the Plan current holders of Fractional Interests who make no election will be treated as having made a Continuing Holder Election Current IRA Holders who make no election will be treated as having made a Position Holder Trust Election

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Holder Contributionf to the Position Holder Trust in exchange for a Position Holder Trust Interest and (c) have responsibility to pay all premiums and other charges (including servicing fees) related to the Continuing Fractional Interest after the Effective Date An IRA Holder that elects this option (a Continuing IRA Holder) will (a) receive a New IRA Note issued by the Position Holder Trust in exchange for the Investors allowed claim against the Debtors relating to the Fractional Position (b) make a Continuing Position Holder Contribution to the IRA Partnership (which will in turn be contributed by the IRA Partnership to the Position Holder Trust) and (c) be relieved of all future obligations to pay any premiums or other required charges after the Effective Date related to the Fractional Position or any of the Policy interests pledged as collateral for the New IRA Notes

Option 2 Position Holder Trust Election - A Current Position Holder may elect to become the holder of a Position Holder Trust Interest or IRA Partnership Interest (an Assigning Position Holder) by contributing 100 of a Fractional Position to the Position Holder Trust (directly or through the IRA Partnership) A holder electing this option for a Fractional Position will (a) either (i) exchange a Fractional Interest for a Position Holder Trust Interest (an Assigning Fractional Holder) or (ii) exchange an IRA Note for an IRA Partnership Interest (an Assigning IRA Holder) and (b) be relieved from responsibility to pay premiums or other required charges related to the Fractional Position exchanged

Option 3 Creditors Trust Election - A Current Position Holder may elect to rescind the purchase of a Fractional Position and thereby become the holder of a Creditors Trust Interest (a Rescinding Position Holder) and be entitled to share in distributions from the Creditors Trust

Option 4 Conversion Election - In addition to the three options listed above a current IRA Holder will have a fourth option (the Conversion Election) which entails (a) a distribution of the IRA Note to the individual owner thereof in exchange for a Fractional Interest owned outside of an individual retirement account and (b) a Continuing Holder Election by the individual owner with respect to the Fractional Interest (who will thereby become a Continuing Fractional Holder) 8

Management Structure ofthe Position Holder Trust and the IRA Partnership

The trustee of the Position Holder Trust (the PHT Trustee) will administer and manage the assets of the trust consistent with the terms of the Plan and the Position Holder Trust Agreement (the PHT Agreement) The Plan Proponents proposed Mr Eduardo S Espinosa to

7 The 5 Continuing Position Holder Contribution is an integral part of the Plan and the Class Action Settlement which is incorporated into the Plan

8 By making the Continuing Holder Election the individual owner will be subject to the same consequences as a Current Position Holder as described above including making the 5 Continuing Position Holder Contribution

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serve as the PHT Trustee 9 The PHT Trustee will also serve as the sole manager of the IRA Partnership The Confirmation Order approves Mr Espinosa serving as both PHT Trustee and manager of the IRA Partnership

The Position Holder Trust will also have a trust board (the Trust Board) composed of five members who are not interested persons of the Debtors or the Position Holder Trust as defined in Section 2(a)(l9) of the 1940 Act with duties and obligations as specified in the PHT Agreement The initial members of the Trust Board as approved in the Confirmation Order include the three individual Investors who currently serve as the members of the Committee and two other individuals designated by the Plan Proponents both of whom have relevant experience in the life settlement industry In addition to meeting and consulting with the PHT Trustee regarding the administration of the trust the Trust Board will have authority to approve certain Major Decisions specified in the PHT Agreement including among other things approval of proposed monthly budgets proposed disposition of any Policy interest or other assets distributions to beneficiaries borrowings and decisions to stop paying premiums on any Policy

Compensation to be Paid by the Position Holder Trust and the IRA Partnership

The table below sets forth a description of the compensation for services and other expenses that the Position Holder Trust and the IRA Partnership would pay subsequent to the Effective Date the general amounts thereof to whom such amounts would be paid and who would be responsible for approving the payment of such amounts 10

Payer Obligation Amount Payee AIroval

Position Holder Trust

Premiums on the Policies11

As required by the Policies

Various insurance carriers

Insurance carriers and state regulatory authorities as applicable

Position Holder Trust

Servicing fees 12 265 ofmaturity proceeds of each Policy paid upon maturity thereof

Servicing Company Bankruptcy Court by confirmation of the Plan

Position Holder Compensation of the $400 per hour plus The PHT Trustee Bankruptcy Court

9 Mr Espinosa was selected after an interview process conducted by the Plan Proponents He is currently serving as the receiver in the Retirement Value LLC receivership proceeding which also involves a life settlement portfolio For more information about Mr Espinosa and the Retirement Value LLC receivership proceeding please see wwwrvllcreceivershipcom

10 The fees and expenses of the Position Holder Trust and the IRA Partnership will be funded out of the Position Holder Trusts share of the portfolio cash flow produced by the Policies as detailed in Exhibits C and D to the Disclosure Statement Projected cash flows have been updated to reflect actual elections made by Current Position Holders and other events that have occurred since the Disclosure Statement was filed in June 2016 and introduced into evidence during the confirmation hearing The projected cash flows are not materially different from those set forth in the Disclosure Statement exhibits

11 Continuing Fractional Holders will be obligated to pay their pro rata share of premiums which will be collected by the Servicing Company

12 Continuing Fractional Holders will be obligated to pay servicing fees on their pro rata share of maturities which will be paid to the Servicing Company out of the maturity proceeds when collected

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B The Plan and the Entities to be Created Pursuant to the Plan

The Plan

The Debtors Chapter 11 bankruptcy cases have been designated by the Bankruptcy Court as complex Chapter 11 cases The Debtors have over 90000 creditors and parties in interest and control almost 3400 Policies with an aggregate face amount of approximately $23 billion There are approximately 22000 Current Position Holders (as defined below) and over 100000 outstanding Fractional Positions

During the course of the Debtors Chapter 11 bankruptcy cases the Trustee has been in negotiations with numerous parties over numerous issues including the Ownership Issue and the path to reorganization To resolve the Ownership Issue the Trustee and the Debtors have negotiated a settlement agreement of pending class action litigation (the Class Action Settlement) pursuant to which Investors who currently hold Fractional Positions (collectively the Current Position Holders) will be provided with choices under the Plan for the treatment of their claims against the Debtors relating to their Fractional Positions The Class Action Settlement has been approved by both the Bankruptcy Court and the US District Court for the Northern District of Texas

On June 24 2016 the Bankruptcy Court approved the Disclosure Statement for the Plan (the Disclosure Statement) and authorized the Plan Proponents to solicit votes on the Plan A copy of the Disclosure Statement is enclosed herewith as Exhibit B On November 1 2016 the Bankruptcy Court entered its order confirming the Plan (the Confirmation Order) and a copy of the Confirmation Order is enclosed herewith as Exhibit C

Entities to be Created Pursuant to the Plan

Under the Plan the following three (or four) new legal entities will be created to implement the provisions of the Plan and to take required actions under the Plan

(1) The Position Holder Trust- Life Partners Position Holder Trust (the Position Holder Trust) is a liquidating trust which will

bull Own legal title to and all beneficial and equitable title not represented by Continuing Fractional Interests (as defined below) in almost 3400 Policies purchased by LPI in life settlement transactions using the proceeds from LPI s sale of Fractional Positions preserve and liquidate those Policy assets2

2 With respect to the liquidation of the Policies (or any Fractional Interests in any of the Policies) it is important to highlight that the Position Holder Trust will not be actively seeking to sell the Policies (or any Fractional Interests) and in most cases will likely have to hold the Policies (and its Fractional Interests therein) until maturity (ie the death of the insured) The reasons for this relate to the following factors

The fractional ownership model for life settlement policies makes it impossible to sell an entire Policy without the consent (and participation) of all owners of Continuing Fractional Interests thus making the sale process very cumbersome and expensive

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including through a servicing contract with or its ownership of the Servicing Company (as defined below) and its ownership of the stock of LPI as a reorganized Debtor3 (Reorganized LPr) after the Plan becomes effective and distribute the liquidating proceeds of those assets to holders of Position Holder Trust Interests (as defined below)

bull Issue beneficial interests in the Position Holder Trust (the Position Holder Trust Interests) in satisfaction of claims against LPI to (a)(i) the current holders of Fractional Positions denominated as Fractional Interests who make

Under the Class Action Settlement and the Plan the Position Holder Trust will not have the right to sell a Policy out from under the Continuing Fractional Holders

In most liquidations ownership of the assets held by the liquidating trust are not in question (ie the liquidating trust can sell 100 of the assets held by it without anyone elses consent) Here absent the Class Action Settlement (and the compromise of the Ownership Issue embodied therein) there would remain an active adversarial dispute over ownership of the Policies making it virtually impossible to sell most Policies and in turn the Debtors Chapter 11 bankruptcy proceedings would likely have to be converted into a Chapter 7 liquidation (which would lead to the lapse of many Policies and the concomitant loss of significant value)

The key benefit of being a holder of a Fractional Interest is the possibility of a payout of 100 ofthe death benefit (face amount) associated with the Fractional Interest upon maturity of the Policy Preserving the fractional ownership model (the right to continue to hold such a lottery ticket) is a cornerstone of the Class Action Settlement and the Plan

The Plan Proponents believe that the best way to maximize recoveries by the defrauded Investors who make up the vast majority of the creditors of the Debtors bankruptcy estate is to allow the portfolio of Policies to liquidate through maturity (ie a portfolio run-off) which will maximize the cash flow available to provide returns to the Investors

Sales of life settlement policies never generate 100 of face amount and many policies generate less than 10 of face amount some only 1 or 2 ifthey can be sold at all

Although the Position Holder Trust will have authority to sell its fractional share of beneficial ownership in a Policy (ie the Fractional Interest) it will not be actively seeking to sell Fractional Interests for the same reasons it will not be actively seeking to sell Policies Fractional Interests can be even harder to sell than entire Policies and when they can be sold they generally sell at an even greater discount to face amount thereof given they are minority interests and subject to additional risks (eg the risk of lapse if any of the other fractional owners decides to stop paying its share of premiums the inability to communicate with the insurance company regarding the Policy (as only the owner oflegal title to the Policy has that right) etc)

The Trustees projections (included in the Disclosure Statement) reflect that over time it is anticipated that the Position Holder Trust will return more than 50 of face value to those Investors who make Position Holder Trust Elections which will amount to approximately 90 of invested capital The recovery will be increased by any litigation recoveries in excess of the amount needed to pay general unsecured creditors and any cost savings from the reserves included in the projections (primarily savings in expenses reserved for securities compliance and investor protections)

3 Certain activities conducted in servicing the Policies can only be performed with a life settlement license from the Texas Department of Insurance and similar licenses from comparable regulatory bodies in other states and LPI currently possesses the required licenses To the extent necessary after the Plan becomes effective Reorganized LPI will continue to conduct those activities pursuant to its licenses while the new Servicing Company obtains its own to the extent required

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either a Continuing Holder Election or a Position Holder Trust Election (each as defined below) and (ii) IRA Holders who make a Conversion Election (as defined below) to receive a Fractional Interest and (b) the IRA Partnership (as defined below) with respect to Investors who (i) are IRA Holders and (ii) make a Continuing Holder Election or a Position Holder Trust Election

bull Issue new secured promissory notes (New IRA Notes) in satisfaction of claims against LPI to IRA Holders who make a Continuing Holder Election and

bull In addition to distributing the liquidating proceeds of the assets contributed to it as provided in the Plan distribute to the holders of Position Holder Trust Interests any funds received by it as the residual beneficiary of the Creditors Trust (as defined below) and proceeds of any Fractional Interests assigned to the Position Holder Trust as a result of the prosecution of the causes of action assigned to the Creditors Trust (Recovered Assets) or as part of any contribution to be made to the Creditors Trust by the SEC as a result of its actions against the former management of the Debtors and other parties involved in the pre-bankruptcy fraud scheme (Fair Funds)

(2) The IRA Partnership - Life Partners IRA Partnership LLC (the IRA Partnerstip) will (a) issue limited liability company interests (the IRA Partnerstip Interests) in satisfaction of claims against LPI to IRA Holders who make a Continuing Holder Election or a Position Holder Trust Election and (b) hold Position Holder Trust Interests issued under the Plan with respect to those elections

(3) The Creditors Trust- Life Partners Creditors Trust (the Creditors Trust) will (a) pursue litigation and other causes of action assigned to it under the Plan and (b) distribute the net proceeds collected by it to the holders of interests in the Creditors Trust (the Creditors Trust Interests) which will consist of the current holders of Fractional Positions who make a Creditors Trust Election (as defined below) and other holders of allowed general unsecured claims against LPI including the SEC in satisfaction of its judgment claim against LPHI4 As discussed above the Position Holder Trust will have a residual interest in the Creditors Trust including with respect to any Fair Funds contributed to the Creditors Trust by the SEC from its actions against the former management of the Debtors and other parties involved in the pre-bankruptcy fraud scheme

(4) The Servicing Company - The Plan contemplates that a third party Vida Capital Inc (Vida) will act as the servicing company (the Servicing Company) to (a) provide services in connection with the maintenance and collection of benefits of the Policies after the effective date of the Plan (the Effective Date) and (b) provide investor account and other administrative

4 Under the Plan and Creditors Trust Agreement distributions allocated to the SECs Creditors Trust Interest will be reallocated and distributed to Investors who are holders of Creditors Trust Interests and after those Investors receive a full recovery to the Position Holder Trust for distribution to its beneficiaries all of whom are Investors

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services to the Position Holder Trust and the Continuing Position Holders relating to the Continuing Fractional Interests and New IRA Notes outstanding after the Effective Date (together the Continuing Positions with the holders thereof referred to as the Continuing Position Holders) as well as the outstanding Position Holder Trust Interests and IRA Partnership Interests including maintaining or engaging a third party to maintain the ownership registers for the Continuing Fractional Interests Position Holder Trust Interests and IRA Partnership Interests (collectively New Interests) and the New IRA Notes If for any reason Vida does not act as the Servicing Company a new subsidiary whollymiddot owned by the Position Holder Trust (Newco) will be formed to act in that capacity and until Newcos formation is completed and it has obtained all necessary licenses Reorganized LPI will act as the Servicing Company5

Election Options under the Plan

The Plan contains a feature that allows Current Position Holders to elect which treatment they would like under the Plan for their claims related to their Fractional Positions For each Fractional Position held a Current Position Holder generally may choose one of three (or four with respect to IRA Holders) alternative elections to be effective on the Effective Date as summarized below 6

Option 1 Continuing Holder Election - A Current Position Holder may elect to become a Continuing Position Holder with respect to a Fractional Position The holder of a Fractional Interest that elects this option will (a) receive confirmed status as the owner of 95 of the Fractional Interest with respect to which the election was made (a Continuing Fractional Holder of a Continuing Fractional Interest) (b) make a contribution of the remaining 5 of the Fractional Interest (a Continuing Position

5 During the bankruptcy proceedings the Plan Proponents negotiated a term sheet with Vida a copy if which is attached to the Disclosure Statement as Exhibit G (the Vida Term Slteef) Since then they have negotiated a defmitive Vida Plan Collaboration Agreement (the Vida Plan Collaboration Agreement) providing for the transactions contemplated by the Vida Term Sheet and the Vida Plan Collaboration Agreement was approved by the Bankruptcy Court in the Confirmation Order Under the Vida Plan Collaboration Agreement Vida has committed to provide the fmancing necessary to implement the transactions contemplated by the Plan to occur on the Effective Date If the transactions under the Vida Plan Collaboration Agreement are not completed for any reason such fmancing will be provided in the form of the Maturity Funds Facility as provided for in the Plan which is the same source of fmancing previously approved by the Bankruptcy Court unless replaced by another source of exit fmancing provided by a third-party other than Vida The fmancing provided by Vida will accelerate distribution of pre-Effective Date maturity proceeds following the Effective Date a result argued for by several interested parties In addition Vida will purchase the right to provide services as the Servicing Company in exchange for the servicing fee provided for under the Plan Vida has all life settlement licenses required to conduct all of the activities necessary in providing services under the servicing agreement with the Position Holder Trust As a result if Vida is the Servicing Company as anticipated it will not be necessary to form Newco or obtain life settlement licenses for it

6 Under the Plan current holders of Fractional Interests who make no election will be treated as having made a Continuing Holder Election Current IRA Holders who make no election will be treated as having made a Position Holder Trust Election

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Holder Contributionf to the Position Holder Trust in exchange for a Position Holder Trust Interest and (c) have responsibility to pay all premiums and other charges (including servicing fees) related to the Continuing Fractional Interest after the Effective Date An IRA Holder that elects this option (a Continuing IRA Holder) will (a) receive a New IRA Note issued by the Position Holder Trust in exchange for the Investors allowed claim against the Debtors relating to the Fractional Position (b) make a Continuing Position Holder Contribution to the IRA Partnership (which will in turn be contributed by the IRA Partnership to the Position Holder Trust) and (c) be relieved of all future obligations to pay any premiums or other required charges after the Effective Date related to the Fractional Position or any of the Policy interests pledged as collateral for the New IRA Notes

Option 2 Position Holder Trust Election - A Current Position Holder may elect to become the holder of a Position Holder Trust Interest or IRA Partnership Interest (an Assigning Position Holder) by contributing 100 of a Fractional Position to the Position Holder Trust (directly or through the IRA Partnership) A holder electing this option for a Fractional Position will (a) either (i) exchange a Fractional Interest for a Position Holder Trust Interest (an Assigning Fractional Holder) or (ii) exchange an IRA Note for an IRA Partnership Interest (an Assigning IRA Holder) and (b) be relieved from responsibility to pay premiums or other required charges related to the Fractional Position exchanged

Option 3 Creditors Trust Election - A Current Position Holder may elect to rescind the purchase of a Fractional Position and thereby become the holder of a Creditors Trust Interest (a Rescinding Position Holder) and be entitled to share in distributions from the Creditors Trust

Option 4 Conversion Election - In addition to the three options listed above a current IRA Holder will have a fourth option (the Conversion Election) which entails (a) a distribution of the IRA Note to the individual owner thereof in exchange for a Fractional Interest owned outside of an individual retirement account and (b) a Continuing Holder Election by the individual owner with respect to the Fractional Interest (who will thereby become a Continuing Fractional Holder) 8

Management Structure ofthe Position Holder Trust and the IRA Partnership

The trustee of the Position Holder Trust (the PHT Trustee) will administer and manage the assets of the trust consistent with the terms of the Plan and the Position Holder Trust Agreement (the PHT Agreement) The Plan Proponents proposed Mr Eduardo S Espinosa to

7 The 5 Continuing Position Holder Contribution is an integral part of the Plan and the Class Action Settlement which is incorporated into the Plan

8 By making the Continuing Holder Election the individual owner will be subject to the same consequences as a Current Position Holder as described above including making the 5 Continuing Position Holder Contribution

7 522202 000003 186848634

serve as the PHT Trustee 9 The PHT Trustee will also serve as the sole manager of the IRA Partnership The Confirmation Order approves Mr Espinosa serving as both PHT Trustee and manager of the IRA Partnership

The Position Holder Trust will also have a trust board (the Trust Board) composed of five members who are not interested persons of the Debtors or the Position Holder Trust as defined in Section 2(a)(l9) of the 1940 Act with duties and obligations as specified in the PHT Agreement The initial members of the Trust Board as approved in the Confirmation Order include the three individual Investors who currently serve as the members of the Committee and two other individuals designated by the Plan Proponents both of whom have relevant experience in the life settlement industry In addition to meeting and consulting with the PHT Trustee regarding the administration of the trust the Trust Board will have authority to approve certain Major Decisions specified in the PHT Agreement including among other things approval of proposed monthly budgets proposed disposition of any Policy interest or other assets distributions to beneficiaries borrowings and decisions to stop paying premiums on any Policy

Compensation to be Paid by the Position Holder Trust and the IRA Partnership

The table below sets forth a description of the compensation for services and other expenses that the Position Holder Trust and the IRA Partnership would pay subsequent to the Effective Date the general amounts thereof to whom such amounts would be paid and who would be responsible for approving the payment of such amounts 10

Payer Obligation Amount Payee AIroval

Position Holder Trust

Premiums on the Policies11

As required by the Policies

Various insurance carriers

Insurance carriers and state regulatory authorities as applicable

Position Holder Trust

Servicing fees 12 265 ofmaturity proceeds of each Policy paid upon maturity thereof

Servicing Company Bankruptcy Court by confirmation of the Plan

Position Holder Compensation of the $400 per hour plus The PHT Trustee Bankruptcy Court

9 Mr Espinosa was selected after an interview process conducted by the Plan Proponents He is currently serving as the receiver in the Retirement Value LLC receivership proceeding which also involves a life settlement portfolio For more information about Mr Espinosa and the Retirement Value LLC receivership proceeding please see wwwrvllcreceivershipcom

10 The fees and expenses of the Position Holder Trust and the IRA Partnership will be funded out of the Position Holder Trusts share of the portfolio cash flow produced by the Policies as detailed in Exhibits C and D to the Disclosure Statement Projected cash flows have been updated to reflect actual elections made by Current Position Holders and other events that have occurred since the Disclosure Statement was filed in June 2016 and introduced into evidence during the confirmation hearing The projected cash flows are not materially different from those set forth in the Disclosure Statement exhibits

11 Continuing Fractional Holders will be obligated to pay their pro rata share of premiums which will be collected by the Servicing Company

12 Continuing Fractional Holders will be obligated to pay servicing fees on their pro rata share of maturities which will be paid to the Servicing Company out of the maturity proceeds when collected

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including through a servicing contract with or its ownership of the Servicing Company (as defined below) and its ownership of the stock of LPI as a reorganized Debtor3 (Reorganized LPr) after the Plan becomes effective and distribute the liquidating proceeds of those assets to holders of Position Holder Trust Interests (as defined below)

bull Issue beneficial interests in the Position Holder Trust (the Position Holder Trust Interests) in satisfaction of claims against LPI to (a)(i) the current holders of Fractional Positions denominated as Fractional Interests who make

Under the Class Action Settlement and the Plan the Position Holder Trust will not have the right to sell a Policy out from under the Continuing Fractional Holders

In most liquidations ownership of the assets held by the liquidating trust are not in question (ie the liquidating trust can sell 100 of the assets held by it without anyone elses consent) Here absent the Class Action Settlement (and the compromise of the Ownership Issue embodied therein) there would remain an active adversarial dispute over ownership of the Policies making it virtually impossible to sell most Policies and in turn the Debtors Chapter 11 bankruptcy proceedings would likely have to be converted into a Chapter 7 liquidation (which would lead to the lapse of many Policies and the concomitant loss of significant value)

The key benefit of being a holder of a Fractional Interest is the possibility of a payout of 100 ofthe death benefit (face amount) associated with the Fractional Interest upon maturity of the Policy Preserving the fractional ownership model (the right to continue to hold such a lottery ticket) is a cornerstone of the Class Action Settlement and the Plan

The Plan Proponents believe that the best way to maximize recoveries by the defrauded Investors who make up the vast majority of the creditors of the Debtors bankruptcy estate is to allow the portfolio of Policies to liquidate through maturity (ie a portfolio run-off) which will maximize the cash flow available to provide returns to the Investors

Sales of life settlement policies never generate 100 of face amount and many policies generate less than 10 of face amount some only 1 or 2 ifthey can be sold at all

Although the Position Holder Trust will have authority to sell its fractional share of beneficial ownership in a Policy (ie the Fractional Interest) it will not be actively seeking to sell Fractional Interests for the same reasons it will not be actively seeking to sell Policies Fractional Interests can be even harder to sell than entire Policies and when they can be sold they generally sell at an even greater discount to face amount thereof given they are minority interests and subject to additional risks (eg the risk of lapse if any of the other fractional owners decides to stop paying its share of premiums the inability to communicate with the insurance company regarding the Policy (as only the owner oflegal title to the Policy has that right) etc)

The Trustees projections (included in the Disclosure Statement) reflect that over time it is anticipated that the Position Holder Trust will return more than 50 of face value to those Investors who make Position Holder Trust Elections which will amount to approximately 90 of invested capital The recovery will be increased by any litigation recoveries in excess of the amount needed to pay general unsecured creditors and any cost savings from the reserves included in the projections (primarily savings in expenses reserved for securities compliance and investor protections)

3 Certain activities conducted in servicing the Policies can only be performed with a life settlement license from the Texas Department of Insurance and similar licenses from comparable regulatory bodies in other states and LPI currently possesses the required licenses To the extent necessary after the Plan becomes effective Reorganized LPI will continue to conduct those activities pursuant to its licenses while the new Servicing Company obtains its own to the extent required

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either a Continuing Holder Election or a Position Holder Trust Election (each as defined below) and (ii) IRA Holders who make a Conversion Election (as defined below) to receive a Fractional Interest and (b) the IRA Partnership (as defined below) with respect to Investors who (i) are IRA Holders and (ii) make a Continuing Holder Election or a Position Holder Trust Election

bull Issue new secured promissory notes (New IRA Notes) in satisfaction of claims against LPI to IRA Holders who make a Continuing Holder Election and

bull In addition to distributing the liquidating proceeds of the assets contributed to it as provided in the Plan distribute to the holders of Position Holder Trust Interests any funds received by it as the residual beneficiary of the Creditors Trust (as defined below) and proceeds of any Fractional Interests assigned to the Position Holder Trust as a result of the prosecution of the causes of action assigned to the Creditors Trust (Recovered Assets) or as part of any contribution to be made to the Creditors Trust by the SEC as a result of its actions against the former management of the Debtors and other parties involved in the pre-bankruptcy fraud scheme (Fair Funds)

(2) The IRA Partnership - Life Partners IRA Partnership LLC (the IRA Partnerstip) will (a) issue limited liability company interests (the IRA Partnerstip Interests) in satisfaction of claims against LPI to IRA Holders who make a Continuing Holder Election or a Position Holder Trust Election and (b) hold Position Holder Trust Interests issued under the Plan with respect to those elections

(3) The Creditors Trust- Life Partners Creditors Trust (the Creditors Trust) will (a) pursue litigation and other causes of action assigned to it under the Plan and (b) distribute the net proceeds collected by it to the holders of interests in the Creditors Trust (the Creditors Trust Interests) which will consist of the current holders of Fractional Positions who make a Creditors Trust Election (as defined below) and other holders of allowed general unsecured claims against LPI including the SEC in satisfaction of its judgment claim against LPHI4 As discussed above the Position Holder Trust will have a residual interest in the Creditors Trust including with respect to any Fair Funds contributed to the Creditors Trust by the SEC from its actions against the former management of the Debtors and other parties involved in the pre-bankruptcy fraud scheme

(4) The Servicing Company - The Plan contemplates that a third party Vida Capital Inc (Vida) will act as the servicing company (the Servicing Company) to (a) provide services in connection with the maintenance and collection of benefits of the Policies after the effective date of the Plan (the Effective Date) and (b) provide investor account and other administrative

4 Under the Plan and Creditors Trust Agreement distributions allocated to the SECs Creditors Trust Interest will be reallocated and distributed to Investors who are holders of Creditors Trust Interests and after those Investors receive a full recovery to the Position Holder Trust for distribution to its beneficiaries all of whom are Investors

5 522202 000003 186848634

services to the Position Holder Trust and the Continuing Position Holders relating to the Continuing Fractional Interests and New IRA Notes outstanding after the Effective Date (together the Continuing Positions with the holders thereof referred to as the Continuing Position Holders) as well as the outstanding Position Holder Trust Interests and IRA Partnership Interests including maintaining or engaging a third party to maintain the ownership registers for the Continuing Fractional Interests Position Holder Trust Interests and IRA Partnership Interests (collectively New Interests) and the New IRA Notes If for any reason Vida does not act as the Servicing Company a new subsidiary whollymiddot owned by the Position Holder Trust (Newco) will be formed to act in that capacity and until Newcos formation is completed and it has obtained all necessary licenses Reorganized LPI will act as the Servicing Company5

Election Options under the Plan

The Plan contains a feature that allows Current Position Holders to elect which treatment they would like under the Plan for their claims related to their Fractional Positions For each Fractional Position held a Current Position Holder generally may choose one of three (or four with respect to IRA Holders) alternative elections to be effective on the Effective Date as summarized below 6

Option 1 Continuing Holder Election - A Current Position Holder may elect to become a Continuing Position Holder with respect to a Fractional Position The holder of a Fractional Interest that elects this option will (a) receive confirmed status as the owner of 95 of the Fractional Interest with respect to which the election was made (a Continuing Fractional Holder of a Continuing Fractional Interest) (b) make a contribution of the remaining 5 of the Fractional Interest (a Continuing Position

5 During the bankruptcy proceedings the Plan Proponents negotiated a term sheet with Vida a copy if which is attached to the Disclosure Statement as Exhibit G (the Vida Term Slteef) Since then they have negotiated a defmitive Vida Plan Collaboration Agreement (the Vida Plan Collaboration Agreement) providing for the transactions contemplated by the Vida Term Sheet and the Vida Plan Collaboration Agreement was approved by the Bankruptcy Court in the Confirmation Order Under the Vida Plan Collaboration Agreement Vida has committed to provide the fmancing necessary to implement the transactions contemplated by the Plan to occur on the Effective Date If the transactions under the Vida Plan Collaboration Agreement are not completed for any reason such fmancing will be provided in the form of the Maturity Funds Facility as provided for in the Plan which is the same source of fmancing previously approved by the Bankruptcy Court unless replaced by another source of exit fmancing provided by a third-party other than Vida The fmancing provided by Vida will accelerate distribution of pre-Effective Date maturity proceeds following the Effective Date a result argued for by several interested parties In addition Vida will purchase the right to provide services as the Servicing Company in exchange for the servicing fee provided for under the Plan Vida has all life settlement licenses required to conduct all of the activities necessary in providing services under the servicing agreement with the Position Holder Trust As a result if Vida is the Servicing Company as anticipated it will not be necessary to form Newco or obtain life settlement licenses for it

6 Under the Plan current holders of Fractional Interests who make no election will be treated as having made a Continuing Holder Election Current IRA Holders who make no election will be treated as having made a Position Holder Trust Election

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Holder Contributionf to the Position Holder Trust in exchange for a Position Holder Trust Interest and (c) have responsibility to pay all premiums and other charges (including servicing fees) related to the Continuing Fractional Interest after the Effective Date An IRA Holder that elects this option (a Continuing IRA Holder) will (a) receive a New IRA Note issued by the Position Holder Trust in exchange for the Investors allowed claim against the Debtors relating to the Fractional Position (b) make a Continuing Position Holder Contribution to the IRA Partnership (which will in turn be contributed by the IRA Partnership to the Position Holder Trust) and (c) be relieved of all future obligations to pay any premiums or other required charges after the Effective Date related to the Fractional Position or any of the Policy interests pledged as collateral for the New IRA Notes

Option 2 Position Holder Trust Election - A Current Position Holder may elect to become the holder of a Position Holder Trust Interest or IRA Partnership Interest (an Assigning Position Holder) by contributing 100 of a Fractional Position to the Position Holder Trust (directly or through the IRA Partnership) A holder electing this option for a Fractional Position will (a) either (i) exchange a Fractional Interest for a Position Holder Trust Interest (an Assigning Fractional Holder) or (ii) exchange an IRA Note for an IRA Partnership Interest (an Assigning IRA Holder) and (b) be relieved from responsibility to pay premiums or other required charges related to the Fractional Position exchanged

Option 3 Creditors Trust Election - A Current Position Holder may elect to rescind the purchase of a Fractional Position and thereby become the holder of a Creditors Trust Interest (a Rescinding Position Holder) and be entitled to share in distributions from the Creditors Trust

Option 4 Conversion Election - In addition to the three options listed above a current IRA Holder will have a fourth option (the Conversion Election) which entails (a) a distribution of the IRA Note to the individual owner thereof in exchange for a Fractional Interest owned outside of an individual retirement account and (b) a Continuing Holder Election by the individual owner with respect to the Fractional Interest (who will thereby become a Continuing Fractional Holder) 8

Management Structure ofthe Position Holder Trust and the IRA Partnership

The trustee of the Position Holder Trust (the PHT Trustee) will administer and manage the assets of the trust consistent with the terms of the Plan and the Position Holder Trust Agreement (the PHT Agreement) The Plan Proponents proposed Mr Eduardo S Espinosa to

7 The 5 Continuing Position Holder Contribution is an integral part of the Plan and the Class Action Settlement which is incorporated into the Plan

8 By making the Continuing Holder Election the individual owner will be subject to the same consequences as a Current Position Holder as described above including making the 5 Continuing Position Holder Contribution

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serve as the PHT Trustee 9 The PHT Trustee will also serve as the sole manager of the IRA Partnership The Confirmation Order approves Mr Espinosa serving as both PHT Trustee and manager of the IRA Partnership

The Position Holder Trust will also have a trust board (the Trust Board) composed of five members who are not interested persons of the Debtors or the Position Holder Trust as defined in Section 2(a)(l9) of the 1940 Act with duties and obligations as specified in the PHT Agreement The initial members of the Trust Board as approved in the Confirmation Order include the three individual Investors who currently serve as the members of the Committee and two other individuals designated by the Plan Proponents both of whom have relevant experience in the life settlement industry In addition to meeting and consulting with the PHT Trustee regarding the administration of the trust the Trust Board will have authority to approve certain Major Decisions specified in the PHT Agreement including among other things approval of proposed monthly budgets proposed disposition of any Policy interest or other assets distributions to beneficiaries borrowings and decisions to stop paying premiums on any Policy

Compensation to be Paid by the Position Holder Trust and the IRA Partnership

The table below sets forth a description of the compensation for services and other expenses that the Position Holder Trust and the IRA Partnership would pay subsequent to the Effective Date the general amounts thereof to whom such amounts would be paid and who would be responsible for approving the payment of such amounts 10

Payer Obligation Amount Payee AIroval

Position Holder Trust

Premiums on the Policies11

As required by the Policies

Various insurance carriers

Insurance carriers and state regulatory authorities as applicable

Position Holder Trust

Servicing fees 12 265 ofmaturity proceeds of each Policy paid upon maturity thereof

Servicing Company Bankruptcy Court by confirmation of the Plan

Position Holder Compensation of the $400 per hour plus The PHT Trustee Bankruptcy Court

9 Mr Espinosa was selected after an interview process conducted by the Plan Proponents He is currently serving as the receiver in the Retirement Value LLC receivership proceeding which also involves a life settlement portfolio For more information about Mr Espinosa and the Retirement Value LLC receivership proceeding please see wwwrvllcreceivershipcom

10 The fees and expenses of the Position Holder Trust and the IRA Partnership will be funded out of the Position Holder Trusts share of the portfolio cash flow produced by the Policies as detailed in Exhibits C and D to the Disclosure Statement Projected cash flows have been updated to reflect actual elections made by Current Position Holders and other events that have occurred since the Disclosure Statement was filed in June 2016 and introduced into evidence during the confirmation hearing The projected cash flows are not materially different from those set forth in the Disclosure Statement exhibits

11 Continuing Fractional Holders will be obligated to pay their pro rata share of premiums which will be collected by the Servicing Company

12 Continuing Fractional Holders will be obligated to pay servicing fees on their pro rata share of maturities which will be paid to the Servicing Company out of the maturity proceeds when collected

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either a Continuing Holder Election or a Position Holder Trust Election (each as defined below) and (ii) IRA Holders who make a Conversion Election (as defined below) to receive a Fractional Interest and (b) the IRA Partnership (as defined below) with respect to Investors who (i) are IRA Holders and (ii) make a Continuing Holder Election or a Position Holder Trust Election

bull Issue new secured promissory notes (New IRA Notes) in satisfaction of claims against LPI to IRA Holders who make a Continuing Holder Election and

bull In addition to distributing the liquidating proceeds of the assets contributed to it as provided in the Plan distribute to the holders of Position Holder Trust Interests any funds received by it as the residual beneficiary of the Creditors Trust (as defined below) and proceeds of any Fractional Interests assigned to the Position Holder Trust as a result of the prosecution of the causes of action assigned to the Creditors Trust (Recovered Assets) or as part of any contribution to be made to the Creditors Trust by the SEC as a result of its actions against the former management of the Debtors and other parties involved in the pre-bankruptcy fraud scheme (Fair Funds)

(2) The IRA Partnership - Life Partners IRA Partnership LLC (the IRA Partnerstip) will (a) issue limited liability company interests (the IRA Partnerstip Interests) in satisfaction of claims against LPI to IRA Holders who make a Continuing Holder Election or a Position Holder Trust Election and (b) hold Position Holder Trust Interests issued under the Plan with respect to those elections

(3) The Creditors Trust- Life Partners Creditors Trust (the Creditors Trust) will (a) pursue litigation and other causes of action assigned to it under the Plan and (b) distribute the net proceeds collected by it to the holders of interests in the Creditors Trust (the Creditors Trust Interests) which will consist of the current holders of Fractional Positions who make a Creditors Trust Election (as defined below) and other holders of allowed general unsecured claims against LPI including the SEC in satisfaction of its judgment claim against LPHI4 As discussed above the Position Holder Trust will have a residual interest in the Creditors Trust including with respect to any Fair Funds contributed to the Creditors Trust by the SEC from its actions against the former management of the Debtors and other parties involved in the pre-bankruptcy fraud scheme

(4) The Servicing Company - The Plan contemplates that a third party Vida Capital Inc (Vida) will act as the servicing company (the Servicing Company) to (a) provide services in connection with the maintenance and collection of benefits of the Policies after the effective date of the Plan (the Effective Date) and (b) provide investor account and other administrative

4 Under the Plan and Creditors Trust Agreement distributions allocated to the SECs Creditors Trust Interest will be reallocated and distributed to Investors who are holders of Creditors Trust Interests and after those Investors receive a full recovery to the Position Holder Trust for distribution to its beneficiaries all of whom are Investors

5 522202 000003 186848634

services to the Position Holder Trust and the Continuing Position Holders relating to the Continuing Fractional Interests and New IRA Notes outstanding after the Effective Date (together the Continuing Positions with the holders thereof referred to as the Continuing Position Holders) as well as the outstanding Position Holder Trust Interests and IRA Partnership Interests including maintaining or engaging a third party to maintain the ownership registers for the Continuing Fractional Interests Position Holder Trust Interests and IRA Partnership Interests (collectively New Interests) and the New IRA Notes If for any reason Vida does not act as the Servicing Company a new subsidiary whollymiddot owned by the Position Holder Trust (Newco) will be formed to act in that capacity and until Newcos formation is completed and it has obtained all necessary licenses Reorganized LPI will act as the Servicing Company5

Election Options under the Plan

The Plan contains a feature that allows Current Position Holders to elect which treatment they would like under the Plan for their claims related to their Fractional Positions For each Fractional Position held a Current Position Holder generally may choose one of three (or four with respect to IRA Holders) alternative elections to be effective on the Effective Date as summarized below 6

Option 1 Continuing Holder Election - A Current Position Holder may elect to become a Continuing Position Holder with respect to a Fractional Position The holder of a Fractional Interest that elects this option will (a) receive confirmed status as the owner of 95 of the Fractional Interest with respect to which the election was made (a Continuing Fractional Holder of a Continuing Fractional Interest) (b) make a contribution of the remaining 5 of the Fractional Interest (a Continuing Position

5 During the bankruptcy proceedings the Plan Proponents negotiated a term sheet with Vida a copy if which is attached to the Disclosure Statement as Exhibit G (the Vida Term Slteef) Since then they have negotiated a defmitive Vida Plan Collaboration Agreement (the Vida Plan Collaboration Agreement) providing for the transactions contemplated by the Vida Term Sheet and the Vida Plan Collaboration Agreement was approved by the Bankruptcy Court in the Confirmation Order Under the Vida Plan Collaboration Agreement Vida has committed to provide the fmancing necessary to implement the transactions contemplated by the Plan to occur on the Effective Date If the transactions under the Vida Plan Collaboration Agreement are not completed for any reason such fmancing will be provided in the form of the Maturity Funds Facility as provided for in the Plan which is the same source of fmancing previously approved by the Bankruptcy Court unless replaced by another source of exit fmancing provided by a third-party other than Vida The fmancing provided by Vida will accelerate distribution of pre-Effective Date maturity proceeds following the Effective Date a result argued for by several interested parties In addition Vida will purchase the right to provide services as the Servicing Company in exchange for the servicing fee provided for under the Plan Vida has all life settlement licenses required to conduct all of the activities necessary in providing services under the servicing agreement with the Position Holder Trust As a result if Vida is the Servicing Company as anticipated it will not be necessary to form Newco or obtain life settlement licenses for it

6 Under the Plan current holders of Fractional Interests who make no election will be treated as having made a Continuing Holder Election Current IRA Holders who make no election will be treated as having made a Position Holder Trust Election

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Holder Contributionf to the Position Holder Trust in exchange for a Position Holder Trust Interest and (c) have responsibility to pay all premiums and other charges (including servicing fees) related to the Continuing Fractional Interest after the Effective Date An IRA Holder that elects this option (a Continuing IRA Holder) will (a) receive a New IRA Note issued by the Position Holder Trust in exchange for the Investors allowed claim against the Debtors relating to the Fractional Position (b) make a Continuing Position Holder Contribution to the IRA Partnership (which will in turn be contributed by the IRA Partnership to the Position Holder Trust) and (c) be relieved of all future obligations to pay any premiums or other required charges after the Effective Date related to the Fractional Position or any of the Policy interests pledged as collateral for the New IRA Notes

Option 2 Position Holder Trust Election - A Current Position Holder may elect to become the holder of a Position Holder Trust Interest or IRA Partnership Interest (an Assigning Position Holder) by contributing 100 of a Fractional Position to the Position Holder Trust (directly or through the IRA Partnership) A holder electing this option for a Fractional Position will (a) either (i) exchange a Fractional Interest for a Position Holder Trust Interest (an Assigning Fractional Holder) or (ii) exchange an IRA Note for an IRA Partnership Interest (an Assigning IRA Holder) and (b) be relieved from responsibility to pay premiums or other required charges related to the Fractional Position exchanged

Option 3 Creditors Trust Election - A Current Position Holder may elect to rescind the purchase of a Fractional Position and thereby become the holder of a Creditors Trust Interest (a Rescinding Position Holder) and be entitled to share in distributions from the Creditors Trust

Option 4 Conversion Election - In addition to the three options listed above a current IRA Holder will have a fourth option (the Conversion Election) which entails (a) a distribution of the IRA Note to the individual owner thereof in exchange for a Fractional Interest owned outside of an individual retirement account and (b) a Continuing Holder Election by the individual owner with respect to the Fractional Interest (who will thereby become a Continuing Fractional Holder) 8

Management Structure ofthe Position Holder Trust and the IRA Partnership

The trustee of the Position Holder Trust (the PHT Trustee) will administer and manage the assets of the trust consistent with the terms of the Plan and the Position Holder Trust Agreement (the PHT Agreement) The Plan Proponents proposed Mr Eduardo S Espinosa to

7 The 5 Continuing Position Holder Contribution is an integral part of the Plan and the Class Action Settlement which is incorporated into the Plan

8 By making the Continuing Holder Election the individual owner will be subject to the same consequences as a Current Position Holder as described above including making the 5 Continuing Position Holder Contribution

7 522202 000003 186848634

serve as the PHT Trustee 9 The PHT Trustee will also serve as the sole manager of the IRA Partnership The Confirmation Order approves Mr Espinosa serving as both PHT Trustee and manager of the IRA Partnership

The Position Holder Trust will also have a trust board (the Trust Board) composed of five members who are not interested persons of the Debtors or the Position Holder Trust as defined in Section 2(a)(l9) of the 1940 Act with duties and obligations as specified in the PHT Agreement The initial members of the Trust Board as approved in the Confirmation Order include the three individual Investors who currently serve as the members of the Committee and two other individuals designated by the Plan Proponents both of whom have relevant experience in the life settlement industry In addition to meeting and consulting with the PHT Trustee regarding the administration of the trust the Trust Board will have authority to approve certain Major Decisions specified in the PHT Agreement including among other things approval of proposed monthly budgets proposed disposition of any Policy interest or other assets distributions to beneficiaries borrowings and decisions to stop paying premiums on any Policy

Compensation to be Paid by the Position Holder Trust and the IRA Partnership

The table below sets forth a description of the compensation for services and other expenses that the Position Holder Trust and the IRA Partnership would pay subsequent to the Effective Date the general amounts thereof to whom such amounts would be paid and who would be responsible for approving the payment of such amounts 10

Payer Obligation Amount Payee AIroval

Position Holder Trust

Premiums on the Policies11

As required by the Policies

Various insurance carriers

Insurance carriers and state regulatory authorities as applicable

Position Holder Trust

Servicing fees 12 265 ofmaturity proceeds of each Policy paid upon maturity thereof

Servicing Company Bankruptcy Court by confirmation of the Plan

Position Holder Compensation of the $400 per hour plus The PHT Trustee Bankruptcy Court

9 Mr Espinosa was selected after an interview process conducted by the Plan Proponents He is currently serving as the receiver in the Retirement Value LLC receivership proceeding which also involves a life settlement portfolio For more information about Mr Espinosa and the Retirement Value LLC receivership proceeding please see wwwrvllcreceivershipcom

10 The fees and expenses of the Position Holder Trust and the IRA Partnership will be funded out of the Position Holder Trusts share of the portfolio cash flow produced by the Policies as detailed in Exhibits C and D to the Disclosure Statement Projected cash flows have been updated to reflect actual elections made by Current Position Holders and other events that have occurred since the Disclosure Statement was filed in June 2016 and introduced into evidence during the confirmation hearing The projected cash flows are not materially different from those set forth in the Disclosure Statement exhibits

11 Continuing Fractional Holders will be obligated to pay their pro rata share of premiums which will be collected by the Servicing Company

12 Continuing Fractional Holders will be obligated to pay servicing fees on their pro rata share of maturities which will be paid to the Servicing Company out of the maturity proceeds when collected

8 522202 000003 186848634

services to the Position Holder Trust and the Continuing Position Holders relating to the Continuing Fractional Interests and New IRA Notes outstanding after the Effective Date (together the Continuing Positions with the holders thereof referred to as the Continuing Position Holders) as well as the outstanding Position Holder Trust Interests and IRA Partnership Interests including maintaining or engaging a third party to maintain the ownership registers for the Continuing Fractional Interests Position Holder Trust Interests and IRA Partnership Interests (collectively New Interests) and the New IRA Notes If for any reason Vida does not act as the Servicing Company a new subsidiary whollymiddot owned by the Position Holder Trust (Newco) will be formed to act in that capacity and until Newcos formation is completed and it has obtained all necessary licenses Reorganized LPI will act as the Servicing Company5

Election Options under the Plan

The Plan contains a feature that allows Current Position Holders to elect which treatment they would like under the Plan for their claims related to their Fractional Positions For each Fractional Position held a Current Position Holder generally may choose one of three (or four with respect to IRA Holders) alternative elections to be effective on the Effective Date as summarized below 6

Option 1 Continuing Holder Election - A Current Position Holder may elect to become a Continuing Position Holder with respect to a Fractional Position The holder of a Fractional Interest that elects this option will (a) receive confirmed status as the owner of 95 of the Fractional Interest with respect to which the election was made (a Continuing Fractional Holder of a Continuing Fractional Interest) (b) make a contribution of the remaining 5 of the Fractional Interest (a Continuing Position

5 During the bankruptcy proceedings the Plan Proponents negotiated a term sheet with Vida a copy if which is attached to the Disclosure Statement as Exhibit G (the Vida Term Slteef) Since then they have negotiated a defmitive Vida Plan Collaboration Agreement (the Vida Plan Collaboration Agreement) providing for the transactions contemplated by the Vida Term Sheet and the Vida Plan Collaboration Agreement was approved by the Bankruptcy Court in the Confirmation Order Under the Vida Plan Collaboration Agreement Vida has committed to provide the fmancing necessary to implement the transactions contemplated by the Plan to occur on the Effective Date If the transactions under the Vida Plan Collaboration Agreement are not completed for any reason such fmancing will be provided in the form of the Maturity Funds Facility as provided for in the Plan which is the same source of fmancing previously approved by the Bankruptcy Court unless replaced by another source of exit fmancing provided by a third-party other than Vida The fmancing provided by Vida will accelerate distribution of pre-Effective Date maturity proceeds following the Effective Date a result argued for by several interested parties In addition Vida will purchase the right to provide services as the Servicing Company in exchange for the servicing fee provided for under the Plan Vida has all life settlement licenses required to conduct all of the activities necessary in providing services under the servicing agreement with the Position Holder Trust As a result if Vida is the Servicing Company as anticipated it will not be necessary to form Newco or obtain life settlement licenses for it

6 Under the Plan current holders of Fractional Interests who make no election will be treated as having made a Continuing Holder Election Current IRA Holders who make no election will be treated as having made a Position Holder Trust Election

6 522202 000003 186848634

Holder Contributionf to the Position Holder Trust in exchange for a Position Holder Trust Interest and (c) have responsibility to pay all premiums and other charges (including servicing fees) related to the Continuing Fractional Interest after the Effective Date An IRA Holder that elects this option (a Continuing IRA Holder) will (a) receive a New IRA Note issued by the Position Holder Trust in exchange for the Investors allowed claim against the Debtors relating to the Fractional Position (b) make a Continuing Position Holder Contribution to the IRA Partnership (which will in turn be contributed by the IRA Partnership to the Position Holder Trust) and (c) be relieved of all future obligations to pay any premiums or other required charges after the Effective Date related to the Fractional Position or any of the Policy interests pledged as collateral for the New IRA Notes

Option 2 Position Holder Trust Election - A Current Position Holder may elect to become the holder of a Position Holder Trust Interest or IRA Partnership Interest (an Assigning Position Holder) by contributing 100 of a Fractional Position to the Position Holder Trust (directly or through the IRA Partnership) A holder electing this option for a Fractional Position will (a) either (i) exchange a Fractional Interest for a Position Holder Trust Interest (an Assigning Fractional Holder) or (ii) exchange an IRA Note for an IRA Partnership Interest (an Assigning IRA Holder) and (b) be relieved from responsibility to pay premiums or other required charges related to the Fractional Position exchanged

Option 3 Creditors Trust Election - A Current Position Holder may elect to rescind the purchase of a Fractional Position and thereby become the holder of a Creditors Trust Interest (a Rescinding Position Holder) and be entitled to share in distributions from the Creditors Trust

Option 4 Conversion Election - In addition to the three options listed above a current IRA Holder will have a fourth option (the Conversion Election) which entails (a) a distribution of the IRA Note to the individual owner thereof in exchange for a Fractional Interest owned outside of an individual retirement account and (b) a Continuing Holder Election by the individual owner with respect to the Fractional Interest (who will thereby become a Continuing Fractional Holder) 8

Management Structure ofthe Position Holder Trust and the IRA Partnership

The trustee of the Position Holder Trust (the PHT Trustee) will administer and manage the assets of the trust consistent with the terms of the Plan and the Position Holder Trust Agreement (the PHT Agreement) The Plan Proponents proposed Mr Eduardo S Espinosa to

7 The 5 Continuing Position Holder Contribution is an integral part of the Plan and the Class Action Settlement which is incorporated into the Plan

8 By making the Continuing Holder Election the individual owner will be subject to the same consequences as a Current Position Holder as described above including making the 5 Continuing Position Holder Contribution

7 522202 000003 186848634

serve as the PHT Trustee 9 The PHT Trustee will also serve as the sole manager of the IRA Partnership The Confirmation Order approves Mr Espinosa serving as both PHT Trustee and manager of the IRA Partnership

The Position Holder Trust will also have a trust board (the Trust Board) composed of five members who are not interested persons of the Debtors or the Position Holder Trust as defined in Section 2(a)(l9) of the 1940 Act with duties and obligations as specified in the PHT Agreement The initial members of the Trust Board as approved in the Confirmation Order include the three individual Investors who currently serve as the members of the Committee and two other individuals designated by the Plan Proponents both of whom have relevant experience in the life settlement industry In addition to meeting and consulting with the PHT Trustee regarding the administration of the trust the Trust Board will have authority to approve certain Major Decisions specified in the PHT Agreement including among other things approval of proposed monthly budgets proposed disposition of any Policy interest or other assets distributions to beneficiaries borrowings and decisions to stop paying premiums on any Policy

Compensation to be Paid by the Position Holder Trust and the IRA Partnership

The table below sets forth a description of the compensation for services and other expenses that the Position Holder Trust and the IRA Partnership would pay subsequent to the Effective Date the general amounts thereof to whom such amounts would be paid and who would be responsible for approving the payment of such amounts 10

Payer Obligation Amount Payee AIroval

Position Holder Trust

Premiums on the Policies11

As required by the Policies

Various insurance carriers

Insurance carriers and state regulatory authorities as applicable

Position Holder Trust

Servicing fees 12 265 ofmaturity proceeds of each Policy paid upon maturity thereof

Servicing Company Bankruptcy Court by confirmation of the Plan

Position Holder Compensation of the $400 per hour plus The PHT Trustee Bankruptcy Court

9 Mr Espinosa was selected after an interview process conducted by the Plan Proponents He is currently serving as the receiver in the Retirement Value LLC receivership proceeding which also involves a life settlement portfolio For more information about Mr Espinosa and the Retirement Value LLC receivership proceeding please see wwwrvllcreceivershipcom

10 The fees and expenses of the Position Holder Trust and the IRA Partnership will be funded out of the Position Holder Trusts share of the portfolio cash flow produced by the Policies as detailed in Exhibits C and D to the Disclosure Statement Projected cash flows have been updated to reflect actual elections made by Current Position Holders and other events that have occurred since the Disclosure Statement was filed in June 2016 and introduced into evidence during the confirmation hearing The projected cash flows are not materially different from those set forth in the Disclosure Statement exhibits

11 Continuing Fractional Holders will be obligated to pay their pro rata share of premiums which will be collected by the Servicing Company

12 Continuing Fractional Holders will be obligated to pay servicing fees on their pro rata share of maturities which will be paid to the Servicing Company out of the maturity proceeds when collected

8 522202 000003 186848634

Holder Contributionf to the Position Holder Trust in exchange for a Position Holder Trust Interest and (c) have responsibility to pay all premiums and other charges (including servicing fees) related to the Continuing Fractional Interest after the Effective Date An IRA Holder that elects this option (a Continuing IRA Holder) will (a) receive a New IRA Note issued by the Position Holder Trust in exchange for the Investors allowed claim against the Debtors relating to the Fractional Position (b) make a Continuing Position Holder Contribution to the IRA Partnership (which will in turn be contributed by the IRA Partnership to the Position Holder Trust) and (c) be relieved of all future obligations to pay any premiums or other required charges after the Effective Date related to the Fractional Position or any of the Policy interests pledged as collateral for the New IRA Notes

Option 2 Position Holder Trust Election - A Current Position Holder may elect to become the holder of a Position Holder Trust Interest or IRA Partnership Interest (an Assigning Position Holder) by contributing 100 of a Fractional Position to the Position Holder Trust (directly or through the IRA Partnership) A holder electing this option for a Fractional Position will (a) either (i) exchange a Fractional Interest for a Position Holder Trust Interest (an Assigning Fractional Holder) or (ii) exchange an IRA Note for an IRA Partnership Interest (an Assigning IRA Holder) and (b) be relieved from responsibility to pay premiums or other required charges related to the Fractional Position exchanged

Option 3 Creditors Trust Election - A Current Position Holder may elect to rescind the purchase of a Fractional Position and thereby become the holder of a Creditors Trust Interest (a Rescinding Position Holder) and be entitled to share in distributions from the Creditors Trust

Option 4 Conversion Election - In addition to the three options listed above a current IRA Holder will have a fourth option (the Conversion Election) which entails (a) a distribution of the IRA Note to the individual owner thereof in exchange for a Fractional Interest owned outside of an individual retirement account and (b) a Continuing Holder Election by the individual owner with respect to the Fractional Interest (who will thereby become a Continuing Fractional Holder) 8

Management Structure ofthe Position Holder Trust and the IRA Partnership

The trustee of the Position Holder Trust (the PHT Trustee) will administer and manage the assets of the trust consistent with the terms of the Plan and the Position Holder Trust Agreement (the PHT Agreement) The Plan Proponents proposed Mr Eduardo S Espinosa to

7 The 5 Continuing Position Holder Contribution is an integral part of the Plan and the Class Action Settlement which is incorporated into the Plan

8 By making the Continuing Holder Election the individual owner will be subject to the same consequences as a Current Position Holder as described above including making the 5 Continuing Position Holder Contribution

7 522202 000003 186848634

serve as the PHT Trustee 9 The PHT Trustee will also serve as the sole manager of the IRA Partnership The Confirmation Order approves Mr Espinosa serving as both PHT Trustee and manager of the IRA Partnership

The Position Holder Trust will also have a trust board (the Trust Board) composed of five members who are not interested persons of the Debtors or the Position Holder Trust as defined in Section 2(a)(l9) of the 1940 Act with duties and obligations as specified in the PHT Agreement The initial members of the Trust Board as approved in the Confirmation Order include the three individual Investors who currently serve as the members of the Committee and two other individuals designated by the Plan Proponents both of whom have relevant experience in the life settlement industry In addition to meeting and consulting with the PHT Trustee regarding the administration of the trust the Trust Board will have authority to approve certain Major Decisions specified in the PHT Agreement including among other things approval of proposed monthly budgets proposed disposition of any Policy interest or other assets distributions to beneficiaries borrowings and decisions to stop paying premiums on any Policy

Compensation to be Paid by the Position Holder Trust and the IRA Partnership

The table below sets forth a description of the compensation for services and other expenses that the Position Holder Trust and the IRA Partnership would pay subsequent to the Effective Date the general amounts thereof to whom such amounts would be paid and who would be responsible for approving the payment of such amounts 10

Payer Obligation Amount Payee AIroval

Position Holder Trust

Premiums on the Policies11

As required by the Policies

Various insurance carriers

Insurance carriers and state regulatory authorities as applicable

Position Holder Trust

Servicing fees 12 265 ofmaturity proceeds of each Policy paid upon maturity thereof

Servicing Company Bankruptcy Court by confirmation of the Plan

Position Holder Compensation of the $400 per hour plus The PHT Trustee Bankruptcy Court

9 Mr Espinosa was selected after an interview process conducted by the Plan Proponents He is currently serving as the receiver in the Retirement Value LLC receivership proceeding which also involves a life settlement portfolio For more information about Mr Espinosa and the Retirement Value LLC receivership proceeding please see wwwrvllcreceivershipcom

10 The fees and expenses of the Position Holder Trust and the IRA Partnership will be funded out of the Position Holder Trusts share of the portfolio cash flow produced by the Policies as detailed in Exhibits C and D to the Disclosure Statement Projected cash flows have been updated to reflect actual elections made by Current Position Holders and other events that have occurred since the Disclosure Statement was filed in June 2016 and introduced into evidence during the confirmation hearing The projected cash flows are not materially different from those set forth in the Disclosure Statement exhibits

11 Continuing Fractional Holders will be obligated to pay their pro rata share of premiums which will be collected by the Servicing Company

12 Continuing Fractional Holders will be obligated to pay servicing fees on their pro rata share of maturities which will be paid to the Servicing Company out of the maturity proceeds when collected

8 522202 000003 186848634

serve as the PHT Trustee 9 The PHT Trustee will also serve as the sole manager of the IRA Partnership The Confirmation Order approves Mr Espinosa serving as both PHT Trustee and manager of the IRA Partnership

The Position Holder Trust will also have a trust board (the Trust Board) composed of five members who are not interested persons of the Debtors or the Position Holder Trust as defined in Section 2(a)(l9) of the 1940 Act with duties and obligations as specified in the PHT Agreement The initial members of the Trust Board as approved in the Confirmation Order include the three individual Investors who currently serve as the members of the Committee and two other individuals designated by the Plan Proponents both of whom have relevant experience in the life settlement industry In addition to meeting and consulting with the PHT Trustee regarding the administration of the trust the Trust Board will have authority to approve certain Major Decisions specified in the PHT Agreement including among other things approval of proposed monthly budgets proposed disposition of any Policy interest or other assets distributions to beneficiaries borrowings and decisions to stop paying premiums on any Policy

Compensation to be Paid by the Position Holder Trust and the IRA Partnership

The table below sets forth a description of the compensation for services and other expenses that the Position Holder Trust and the IRA Partnership would pay subsequent to the Effective Date the general amounts thereof to whom such amounts would be paid and who would be responsible for approving the payment of such amounts 10

Payer Obligation Amount Payee AIroval

Position Holder Trust

Premiums on the Policies11

As required by the Policies

Various insurance carriers

Insurance carriers and state regulatory authorities as applicable

Position Holder Trust

Servicing fees 12 265 ofmaturity proceeds of each Policy paid upon maturity thereof

Servicing Company Bankruptcy Court by confirmation of the Plan

Position Holder Compensation of the $400 per hour plus The PHT Trustee Bankruptcy Court

9 Mr Espinosa was selected after an interview process conducted by the Plan Proponents He is currently serving as the receiver in the Retirement Value LLC receivership proceeding which also involves a life settlement portfolio For more information about Mr Espinosa and the Retirement Value LLC receivership proceeding please see wwwrvllcreceivershipcom

10 The fees and expenses of the Position Holder Trust and the IRA Partnership will be funded out of the Position Holder Trusts share of the portfolio cash flow produced by the Policies as detailed in Exhibits C and D to the Disclosure Statement Projected cash flows have been updated to reflect actual elections made by Current Position Holders and other events that have occurred since the Disclosure Statement was filed in June 2016 and introduced into evidence during the confirmation hearing The projected cash flows are not materially different from those set forth in the Disclosure Statement exhibits

11 Continuing Fractional Holders will be obligated to pay their pro rata share of premiums which will be collected by the Servicing Company

12 Continuing Fractional Holders will be obligated to pay servicing fees on their pro rata share of maturities which will be paid to the Servicing Company out of the maturity proceeds when collected

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Payer Obligation Amount Payee Amroval

Trust PHTTrustee reimbursement for reasonable and necessary business expenses

by confirmation of the Plan

Position Holder Compensation to $40000 to $50000 Trust Board Bankruptcy Court Trust Trust Board annually in the members by confirmation of

members aggregate the Plan IRA Partnership Compensation to the

manager of the IRA Partnership

$400 per hour plus reimbursement for reasonable and necessary business expenses

Manager ofiRA Partnership

This position will also be filled by the PHT Trustee

Bankruptcy Court by confrrmation of the Plan

Position Holder Trust

Fees and expenses for trust accounts securities intermediary services trust indenture trustee

To be determined (arms length terms after request for proposal process which is ongoing)

Third-party depositories custodians and intermediaries

Plan Proponents initially PHT Trustee and Trust Board for any new arrangements going forward

services etc Position Holder Trust

Bankruptcy costs (administrative claims professional fees etc)

To be determined (Exhibit D to Disclosure Statement has current estimate)

Trustee and professionals engaged by the Debtors

Bankruptcy Court

II Discussion

Section 8 of the 1940 Act requires companies that are investment companies to register with the SEC thereunder Pursuant to relevant provisions of Section 3(a) of the 1940 Act an entity is an investment company if it

(1) is or holds itself out as being engaged primarily or proposes to engage primarily in the business of investing reinvesting or trading in securities or

(2) is engaged or proposes to engage in the business of investing reinvesting owning holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40 percent of the value of such issuers total assets (exclusive of Government securities and cash items) on an unconsolidated basis

Based on our discussions with the Staff we understand that the Position Holder Trust and the IRA Partnership may trigger the second prong set forth above and as a result be deemed to be an investment company under Section 3(a) of the 1940 Act Assuming that is the case it is our view that the Position Holder Trust and the IRA Partnership would be exempt from the registration requirement of the 1940 Act pursuant to Sections 7(a) and 7(b) thereof These sections of the 1940 Act set forth prohibitions applicable to investment companies that are not registered under the 1940 Act Such prohibitions are however specifically inapplicable to transactions of an investment company that are merely incidental to its dissolution Because the

9 522202 000003 186848634

principal purpose of the Position Holder Trust and the IRA Partnership will be to effect the liquidation of the Policies to be held of record by the Position Holder Trust and distribution of the liquidating proceeds they should be exempt from 1940 Act registration under Sections 7(a) and 7(b) thereof

A No-Action Letter Precedent for Requested Relief

On numerous occasions the Staff has taken the position that it would not recommend enforcement action to the SEC if a liquidating trust created pursuant to a plan under Chapter 11 of the BankrUptcy Code proceeded to liquidate its assets without registering under the 1940 Act in reliance on the exemptions provided by Sections 7(a) and 7(b) of the 1940 Act The Staff appears to have based its prior grant of no-action relief in these circumstances on the existence of the following factors

(1) the sole purpose of the trust is to liquidate assets and distribute the proceeds thereopoundmiddot 13

(2) the trust will not conduct a trade or business and will be limited to making temporary investments in short-term government securities certain time deposits certificates of deposit bankers acceptances commercial paper and money market funds 14

(3) interests in the trust will not be listed on an exchange and the trust will not take steps designed to facilitate the development of a secondary market in the 15mterests

13 ICH Corporation (pub avail Feb 26 1997) Integrated Resources Inc (pub avail Aug 5 1994) MPC Liquidating Trust (pub avail Mar 10 1994) Oppenheimer Landmark Properties (pub avail Mar 9 1993) VHA Enterprises Inc (pub avail Jan 7 1993) Grubb amp Ellis Realty Income Trust (pub avail May 26 1992) Graphic Scanning Corporation (pub avail Aug 31 1991) Newhall Investment Properties (pub avail Sept 31 1988) Timber Realization Company (pub avail May 14 1987) ASI Communications Inc (pub avail Feb 12 1987) United Western Corporation (pub avail Sept 27 1984) Heizer Corporation (pub avail Feb 8 1984) Pasco Inc (pub avail Oct 8 1976)

14 See Integrated Resources Inc (permitting the liquidating entities to maintain going concern businesses acquired from Integrated Resources Inc pending sale and liquidation and to make temporary investments in money market instruments government short-term securities or other investment grade short-term debt securities pendipg the distribution ofliquidation proceeds to beneficiaries) MPC Liquidating Trust (permitting the trust to make temporary investments in government securities pending the distribution of liquidation proceeds to beneficiaries) Newhall Investment Properties (providing that the trust is restricted from engaging in any ongoing trade or business except to the minimum extent necessary to safeguard and maintain trust assets) Timber Realization Company (providing that the trust is restricted from engaging in any ongoing trade or business except to the minimum extent necessary to safeguard and maintain trust assets)

15 Although a majority of the no-action letters stated that the interests in the trust would be non-transferrable certain no-action letters permitted interests in the trust to be transferable based on certain representations such as that an active trading market in the interests would not develop interests in the trust would not be listed on any national securities exchange or quoted on the Nasdaq Stock Markets and neither the trustees nor the trusts would take steps designed to facilitate the development of a secondary market in the interests See ICH Corporation MPC Liquidating Trust

10 522202 000003 186848634

(4) the bankruptcy court will retain non-exclusive jurisdiction over the trust including jurisdiction to resolve controversies and disputes arising in connection with the liquidation of the trust 16

(5) the trust will terminate on the earlier of (a) the liquidation of all of the trusts assets or (b) a term generally ranging from three to fifteen years from its effective date subject to extension to the extent approved by the bankruptcy court17

(6) the trust will be required to provide periodic reports containinW fmancial statements and certain other information to beneficiaries of the trust 1 and

(7) the trust will not hold itself out as an investment company 19

16 See MPC Liquidating Trust

17 See ICH Corporation (three years from the effective date of the reorganization plan) MPC Liquidating Trust (three years from the effective date of the liquidation plan) Integrated Resources Inc (five years from the effective date of the plan of liquidation) Marbella Founders Trust (three years from the date the interests are transferred to the liquidating trust) VHA Enterprises Inc (three years from the date the interests are transferred to the liquidating trust) Oppenheimer Landmark Properties (three years from the date of the formation of the liquidating trust) Grubb amp Ellis Realty Income Trust (three years from the date the assets are first transferred to the liquidating trust) Graphic Scanning Corporation (three years after the effective date of the merger of the Company and a whollyshyowned subsidiary) Newhall Investment Properties (six years from the date of the transfer of assets and liabilities from the partnership to the trust) Timber Realization Company (fifteen years from its formation) ASI Communications Inc (three years from the date of the trusts formation) United Western Corporation (three years from the transfer of assets to the liquidating trust) Heizer Corporation (three years from its formation)

In addition certain no-action letters permit the trust to extend its term based on certain circumstances See ICH Corporation (permitting the trust to continue in existence for an additional period determined to be necessary by the bankruptcy court in order for the trust to complete the distribution of its assets) MPC Liquidating Trust (permitting the trust to extend its term if the bankruptcy court grants an extension for cause and additional no-action assurance is obtained from the Staff) Integrated Resources Inc (explaining that the liquidation of the trusts assets are subject to significant uncertainties such as general business and economic conditions and illiquidity of certain assets which may result in the liquidation of certain assets exceeding the expected five year period) Newhall Investment Properties (providing that the trustee may extend the life of the trust if on the date set for termination the trustee has received written notice of a claim of liability that may be asserted against the partnership or the trust) Heizer Corporation (stating that the trust may continue to a maximum of twelve years for the limited purposes of dealing with missing beneficiaries and collecting any uncollected assets or defending any known or contingent claims)

18 See Integrated Resources Inc Marbella Founders Trust Oppenheimer Landmark Properties Grubb amp Ellis Realty Income Trust Graphic Scanning Corporation Newhall Investment Properties ASI Communications Inc Timber Realization Company United Western Corporation Heizer Corporation

19 See ICH Corporation MPC Liquidating Trust Integrated Resources Inc

11 522202 000003 186848634

B Analysis of Application of Factors Cited in No-Action Letter Precedent to the Position Holder Trust and the IRA Partnership

Set forth below is an analysis of the factors cited by the Staff in connection with its grant of no-action relief to liquidating trusts under Sections 7(a) and 7(b) of the 1940 Act to the facts in the case at hand

Sole Purpose Requirement

The sole purpose of the Position Holder Trust is to

bull liquidate the Policies to be held by it in a manner calculated to conserve protect and maximize their value to holders of the New Interests and New IRA Notes (ie the defrauded Investors )20 in accordance with the terms of the Plan and the PHT Agreement21 which will govern the Position Holder Trusts administration and operations and

bull distribute the proceeds from liquidation of the Policies along with any distributions received as the residual beneficiary of the Creditors Trust and the proceeds of any Recovered Assets assigned to the Position Holder Trust as a result of prosecution of the causes of action assigned to the Creditors Trust or as part of any Fair Funds contributed by the SEC to the holders of the Position Holder Trust Interests including the IRA Partnership22

The sole purpose of the IRA Partnership is to support the aforementioned purpose of the Position Holder Trust by allowing IRA Holders to participate in the distribution of proceeds of the liquidation of the Policies and thereby participate in the benefits of the Plan without violating certain federal tax rules which prohibit individual retirement accounts from directly holding investments in life insurance policies

20 As discussed in footnote 2 above the Position Holder Trust will not actively seek to sell the Policies (or its Fractional Interests in any Policies) and in most cases will likely hold its Fractional Interests in the Policies until maturity The Position Holder Trust is effectively a run-off trust that will self-liquidate as Policies mature The Position Holder Trust is designed to hold the Policies until maturity because selling the Policies (or Fractional Interests relating thereto) before maturity will generate a lower recovery for Investors Investors who make a Position Holder Trust Election and thus participate in all of the distributions by the Position Holder Trust are projected to receive a recovery of over 50 of the face amount attributable to their Fractional Positions which would represent approximately 90 or more of the invested capital that they have at risk (and this is after payment ofbankruptcy costs and projected future premiums and other expenses of the Position Holder Trust) In contrast the sale of the entire Policy portfolio today would be estimated to generate less than 13 of the aggregate face amount of the Policies (about 21 of invested capital) after payment of all related expenses of the bankruptcy and the sale See Exhibits C and E to the Disclosure Statement attached hereto as Exhibit B hereto and as noted in footnote 2 above sales of some individual Policies would generate less than 10 of face amount A sale of all of the Position Holder Trusts Fractional Interests if it could be completed would generate far less in net sale proceeds as also noted in footnote 2

21 The PHT Agreement is Exhibit D hereto and a copy of the PHT Agreement is included as Exhibit A to the Plan attached hereto as Exhibit A

22 PHT Agreement sect 13

12 522202 000003 186848634

principal purpose of the Position Holder Trust and the IRA Partnership will be to effect the liquidation of the Policies to be held of record by the Position Holder Trust and distribution of the liquidating proceeds they should be exempt from 1940 Act registration under Sections 7(a) and 7(b) thereof

A No-Action Letter Precedent for Requested Relief

On numerous occasions the Staff has taken the position that it would not recommend enforcement action to the SEC if a liquidating trust created pursuant to a plan under Chapter 11 of the BankrUptcy Code proceeded to liquidate its assets without registering under the 1940 Act in reliance on the exemptions provided by Sections 7(a) and 7(b) of the 1940 Act The Staff appears to have based its prior grant of no-action relief in these circumstances on the existence of the following factors

(1) the sole purpose of the trust is to liquidate assets and distribute the proceeds thereopoundmiddot 13

(2) the trust will not conduct a trade or business and will be limited to making temporary investments in short-term government securities certain time deposits certificates of deposit bankers acceptances commercial paper and money market funds 14

(3) interests in the trust will not be listed on an exchange and the trust will not take steps designed to facilitate the development of a secondary market in the 15mterests

13 ICH Corporation (pub avail Feb 26 1997) Integrated Resources Inc (pub avail Aug 5 1994) MPC Liquidating Trust (pub avail Mar 10 1994) Oppenheimer Landmark Properties (pub avail Mar 9 1993) VHA Enterprises Inc (pub avail Jan 7 1993) Grubb amp Ellis Realty Income Trust (pub avail May 26 1992) Graphic Scanning Corporation (pub avail Aug 31 1991) Newhall Investment Properties (pub avail Sept 31 1988) Timber Realization Company (pub avail May 14 1987) ASI Communications Inc (pub avail Feb 12 1987) United Western Corporation (pub avail Sept 27 1984) Heizer Corporation (pub avail Feb 8 1984) Pasco Inc (pub avail Oct 8 1976)

14 See Integrated Resources Inc (permitting the liquidating entities to maintain going concern businesses acquired from Integrated Resources Inc pending sale and liquidation and to make temporary investments in money market instruments government short-term securities or other investment grade short-term debt securities pendipg the distribution ofliquidation proceeds to beneficiaries) MPC Liquidating Trust (permitting the trust to make temporary investments in government securities pending the distribution of liquidation proceeds to beneficiaries) Newhall Investment Properties (providing that the trust is restricted from engaging in any ongoing trade or business except to the minimum extent necessary to safeguard and maintain trust assets) Timber Realization Company (providing that the trust is restricted from engaging in any ongoing trade or business except to the minimum extent necessary to safeguard and maintain trust assets)

15 Although a majority of the no-action letters stated that the interests in the trust would be non-transferrable certain no-action letters permitted interests in the trust to be transferable based on certain representations such as that an active trading market in the interests would not develop interests in the trust would not be listed on any national securities exchange or quoted on the Nasdaq Stock Markets and neither the trustees nor the trusts would take steps designed to facilitate the development of a secondary market in the interests See ICH Corporation MPC Liquidating Trust

10 522202 000003 186848634

(4) the bankruptcy court will retain non-exclusive jurisdiction over the trust including jurisdiction to resolve controversies and disputes arising in connection with the liquidation of the trust 16

(5) the trust will terminate on the earlier of (a) the liquidation of all of the trusts assets or (b) a term generally ranging from three to fifteen years from its effective date subject to extension to the extent approved by the bankruptcy court17

(6) the trust will be required to provide periodic reports containinW fmancial statements and certain other information to beneficiaries of the trust 1 and

(7) the trust will not hold itself out as an investment company 19

16 See MPC Liquidating Trust

17 See ICH Corporation (three years from the effective date of the reorganization plan) MPC Liquidating Trust (three years from the effective date of the liquidation plan) Integrated Resources Inc (five years from the effective date of the plan of liquidation) Marbella Founders Trust (three years from the date the interests are transferred to the liquidating trust) VHA Enterprises Inc (three years from the date the interests are transferred to the liquidating trust) Oppenheimer Landmark Properties (three years from the date of the formation of the liquidating trust) Grubb amp Ellis Realty Income Trust (three years from the date the assets are first transferred to the liquidating trust) Graphic Scanning Corporation (three years after the effective date of the merger of the Company and a whollyshyowned subsidiary) Newhall Investment Properties (six years from the date of the transfer of assets and liabilities from the partnership to the trust) Timber Realization Company (fifteen years from its formation) ASI Communications Inc (three years from the date of the trusts formation) United Western Corporation (three years from the transfer of assets to the liquidating trust) Heizer Corporation (three years from its formation)

In addition certain no-action letters permit the trust to extend its term based on certain circumstances See ICH Corporation (permitting the trust to continue in existence for an additional period determined to be necessary by the bankruptcy court in order for the trust to complete the distribution of its assets) MPC Liquidating Trust (permitting the trust to extend its term if the bankruptcy court grants an extension for cause and additional no-action assurance is obtained from the Staff) Integrated Resources Inc (explaining that the liquidation of the trusts assets are subject to significant uncertainties such as general business and economic conditions and illiquidity of certain assets which may result in the liquidation of certain assets exceeding the expected five year period) Newhall Investment Properties (providing that the trustee may extend the life of the trust if on the date set for termination the trustee has received written notice of a claim of liability that may be asserted against the partnership or the trust) Heizer Corporation (stating that the trust may continue to a maximum of twelve years for the limited purposes of dealing with missing beneficiaries and collecting any uncollected assets or defending any known or contingent claims)

18 See Integrated Resources Inc Marbella Founders Trust Oppenheimer Landmark Properties Grubb amp Ellis Realty Income Trust Graphic Scanning Corporation Newhall Investment Properties ASI Communications Inc Timber Realization Company United Western Corporation Heizer Corporation

19 See ICH Corporation MPC Liquidating Trust Integrated Resources Inc

11 522202 000003 186848634

B Analysis of Application of Factors Cited in No-Action Letter Precedent to the Position Holder Trust and the IRA Partnership

Set forth below is an analysis of the factors cited by the Staff in connection with its grant of no-action relief to liquidating trusts under Sections 7(a) and 7(b) of the 1940 Act to the facts in the case at hand

Sole Purpose Requirement

The sole purpose of the Position Holder Trust is to

bull liquidate the Policies to be held by it in a manner calculated to conserve protect and maximize their value to holders of the New Interests and New IRA Notes (ie the defrauded Investors )20 in accordance with the terms of the Plan and the PHT Agreement21 which will govern the Position Holder Trusts administration and operations and

bull distribute the proceeds from liquidation of the Policies along with any distributions received as the residual beneficiary of the Creditors Trust and the proceeds of any Recovered Assets assigned to the Position Holder Trust as a result of prosecution of the causes of action assigned to the Creditors Trust or as part of any Fair Funds contributed by the SEC to the holders of the Position Holder Trust Interests including the IRA Partnership22

The sole purpose of the IRA Partnership is to support the aforementioned purpose of the Position Holder Trust by allowing IRA Holders to participate in the distribution of proceeds of the liquidation of the Policies and thereby participate in the benefits of the Plan without violating certain federal tax rules which prohibit individual retirement accounts from directly holding investments in life insurance policies

20 As discussed in footnote 2 above the Position Holder Trust will not actively seek to sell the Policies (or its Fractional Interests in any Policies) and in most cases will likely hold its Fractional Interests in the Policies until maturity The Position Holder Trust is effectively a run-off trust that will self-liquidate as Policies mature The Position Holder Trust is designed to hold the Policies until maturity because selling the Policies (or Fractional Interests relating thereto) before maturity will generate a lower recovery for Investors Investors who make a Position Holder Trust Election and thus participate in all of the distributions by the Position Holder Trust are projected to receive a recovery of over 50 of the face amount attributable to their Fractional Positions which would represent approximately 90 or more of the invested capital that they have at risk (and this is after payment ofbankruptcy costs and projected future premiums and other expenses of the Position Holder Trust) In contrast the sale of the entire Policy portfolio today would be estimated to generate less than 13 of the aggregate face amount of the Policies (about 21 of invested capital) after payment of all related expenses of the bankruptcy and the sale See Exhibits C and E to the Disclosure Statement attached hereto as Exhibit B hereto and as noted in footnote 2 above sales of some individual Policies would generate less than 10 of face amount A sale of all of the Position Holder Trusts Fractional Interests if it could be completed would generate far less in net sale proceeds as also noted in footnote 2

21 The PHT Agreement is Exhibit D hereto and a copy of the PHT Agreement is included as Exhibit A to the Plan attached hereto as Exhibit A

22 PHT Agreement sect 13

12 522202 000003 186848634

(4) the bankruptcy court will retain non-exclusive jurisdiction over the trust including jurisdiction to resolve controversies and disputes arising in connection with the liquidation of the trust 16

(5) the trust will terminate on the earlier of (a) the liquidation of all of the trusts assets or (b) a term generally ranging from three to fifteen years from its effective date subject to extension to the extent approved by the bankruptcy court17

(6) the trust will be required to provide periodic reports containinW fmancial statements and certain other information to beneficiaries of the trust 1 and

(7) the trust will not hold itself out as an investment company 19

16 See MPC Liquidating Trust

17 See ICH Corporation (three years from the effective date of the reorganization plan) MPC Liquidating Trust (three years from the effective date of the liquidation plan) Integrated Resources Inc (five years from the effective date of the plan of liquidation) Marbella Founders Trust (three years from the date the interests are transferred to the liquidating trust) VHA Enterprises Inc (three years from the date the interests are transferred to the liquidating trust) Oppenheimer Landmark Properties (three years from the date of the formation of the liquidating trust) Grubb amp Ellis Realty Income Trust (three years from the date the assets are first transferred to the liquidating trust) Graphic Scanning Corporation (three years after the effective date of the merger of the Company and a whollyshyowned subsidiary) Newhall Investment Properties (six years from the date of the transfer of assets and liabilities from the partnership to the trust) Timber Realization Company (fifteen years from its formation) ASI Communications Inc (three years from the date of the trusts formation) United Western Corporation (three years from the transfer of assets to the liquidating trust) Heizer Corporation (three years from its formation)

In addition certain no-action letters permit the trust to extend its term based on certain circumstances See ICH Corporation (permitting the trust to continue in existence for an additional period determined to be necessary by the bankruptcy court in order for the trust to complete the distribution of its assets) MPC Liquidating Trust (permitting the trust to extend its term if the bankruptcy court grants an extension for cause and additional no-action assurance is obtained from the Staff) Integrated Resources Inc (explaining that the liquidation of the trusts assets are subject to significant uncertainties such as general business and economic conditions and illiquidity of certain assets which may result in the liquidation of certain assets exceeding the expected five year period) Newhall Investment Properties (providing that the trustee may extend the life of the trust if on the date set for termination the trustee has received written notice of a claim of liability that may be asserted against the partnership or the trust) Heizer Corporation (stating that the trust may continue to a maximum of twelve years for the limited purposes of dealing with missing beneficiaries and collecting any uncollected assets or defending any known or contingent claims)

18 See Integrated Resources Inc Marbella Founders Trust Oppenheimer Landmark Properties Grubb amp Ellis Realty Income Trust Graphic Scanning Corporation Newhall Investment Properties ASI Communications Inc Timber Realization Company United Western Corporation Heizer Corporation

19 See ICH Corporation MPC Liquidating Trust Integrated Resources Inc

11 522202 000003 186848634

B Analysis of Application of Factors Cited in No-Action Letter Precedent to the Position Holder Trust and the IRA Partnership

Set forth below is an analysis of the factors cited by the Staff in connection with its grant of no-action relief to liquidating trusts under Sections 7(a) and 7(b) of the 1940 Act to the facts in the case at hand

Sole Purpose Requirement

The sole purpose of the Position Holder Trust is to

bull liquidate the Policies to be held by it in a manner calculated to conserve protect and maximize their value to holders of the New Interests and New IRA Notes (ie the defrauded Investors )20 in accordance with the terms of the Plan and the PHT Agreement21 which will govern the Position Holder Trusts administration and operations and

bull distribute the proceeds from liquidation of the Policies along with any distributions received as the residual beneficiary of the Creditors Trust and the proceeds of any Recovered Assets assigned to the Position Holder Trust as a result of prosecution of the causes of action assigned to the Creditors Trust or as part of any Fair Funds contributed by the SEC to the holders of the Position Holder Trust Interests including the IRA Partnership22

The sole purpose of the IRA Partnership is to support the aforementioned purpose of the Position Holder Trust by allowing IRA Holders to participate in the distribution of proceeds of the liquidation of the Policies and thereby participate in the benefits of the Plan without violating certain federal tax rules which prohibit individual retirement accounts from directly holding investments in life insurance policies

20 As discussed in footnote 2 above the Position Holder Trust will not actively seek to sell the Policies (or its Fractional Interests in any Policies) and in most cases will likely hold its Fractional Interests in the Policies until maturity The Position Holder Trust is effectively a run-off trust that will self-liquidate as Policies mature The Position Holder Trust is designed to hold the Policies until maturity because selling the Policies (or Fractional Interests relating thereto) before maturity will generate a lower recovery for Investors Investors who make a Position Holder Trust Election and thus participate in all of the distributions by the Position Holder Trust are projected to receive a recovery of over 50 of the face amount attributable to their Fractional Positions which would represent approximately 90 or more of the invested capital that they have at risk (and this is after payment ofbankruptcy costs and projected future premiums and other expenses of the Position Holder Trust) In contrast the sale of the entire Policy portfolio today would be estimated to generate less than 13 of the aggregate face amount of the Policies (about 21 of invested capital) after payment of all related expenses of the bankruptcy and the sale See Exhibits C and E to the Disclosure Statement attached hereto as Exhibit B hereto and as noted in footnote 2 above sales of some individual Policies would generate less than 10 of face amount A sale of all of the Position Holder Trusts Fractional Interests if it could be completed would generate far less in net sale proceeds as also noted in footnote 2

21 The PHT Agreement is Exhibit D hereto and a copy of the PHT Agreement is included as Exhibit A to the Plan attached hereto as Exhibit A

22 PHT Agreement sect 13

12 522202 000003 186848634

B Analysis of Application of Factors Cited in No-Action Letter Precedent to the Position Holder Trust and the IRA Partnership

Set forth below is an analysis of the factors cited by the Staff in connection with its grant of no-action relief to liquidating trusts under Sections 7(a) and 7(b) of the 1940 Act to the facts in the case at hand

Sole Purpose Requirement

The sole purpose of the Position Holder Trust is to

bull liquidate the Policies to be held by it in a manner calculated to conserve protect and maximize their value to holders of the New Interests and New IRA Notes (ie the defrauded Investors )20 in accordance with the terms of the Plan and the PHT Agreement21 which will govern the Position Holder Trusts administration and operations and

bull distribute the proceeds from liquidation of the Policies along with any distributions received as the residual beneficiary of the Creditors Trust and the proceeds of any Recovered Assets assigned to the Position Holder Trust as a result of prosecution of the causes of action assigned to the Creditors Trust or as part of any Fair Funds contributed by the SEC to the holders of the Position Holder Trust Interests including the IRA Partnership22

The sole purpose of the IRA Partnership is to support the aforementioned purpose of the Position Holder Trust by allowing IRA Holders to participate in the distribution of proceeds of the liquidation of the Policies and thereby participate in the benefits of the Plan without violating certain federal tax rules which prohibit individual retirement accounts from directly holding investments in life insurance policies

20 As discussed in footnote 2 above the Position Holder Trust will not actively seek to sell the Policies (or its Fractional Interests in any Policies) and in most cases will likely hold its Fractional Interests in the Policies until maturity The Position Holder Trust is effectively a run-off trust that will self-liquidate as Policies mature The Position Holder Trust is designed to hold the Policies until maturity because selling the Policies (or Fractional Interests relating thereto) before maturity will generate a lower recovery for Investors Investors who make a Position Holder Trust Election and thus participate in all of the distributions by the Position Holder Trust are projected to receive a recovery of over 50 of the face amount attributable to their Fractional Positions which would represent approximately 90 or more of the invested capital that they have at risk (and this is after payment ofbankruptcy costs and projected future premiums and other expenses of the Position Holder Trust) In contrast the sale of the entire Policy portfolio today would be estimated to generate less than 13 of the aggregate face amount of the Policies (about 21 of invested capital) after payment of all related expenses of the bankruptcy and the sale See Exhibits C and E to the Disclosure Statement attached hereto as Exhibit B hereto and as noted in footnote 2 above sales of some individual Policies would generate less than 10 of face amount A sale of all of the Position Holder Trusts Fractional Interests if it could be completed would generate far less in net sale proceeds as also noted in footnote 2

21 The PHT Agreement is Exhibit D hereto and a copy of the PHT Agreement is included as Exhibit A to the Plan attached hereto as Exhibit A

22 PHT Agreement sect 13

12 522202 000003 186848634

No Trade or Business

The Position Holder Trust will be established as a liquidating trust treated as a grantor trust within the meaning of Treasury Regulations Section 3017701-(4)(d) No objective or authority of the Position Holder Trust will be to continue or engage in the conduct of a trade or business except to the extent reasonably necessary to and consistent with the liquidating purpose of the Position Holder Trust 23 Among other limitations on the PHT Trustees powers Section 42 ofthe PHT Agreement provides that [n]o part of the Position Holder Trust Assets or the proceeds revenue or income therefrom shall be used or disposed of by the Trustee in furtherance of any business except to the extent necessary to and consistent with the liquidating purpose of the Position Holder Trust24

Once the Plan has been substantially consummated the Position Holder Trust will not acquire any additional assets or securities other than as a consequence of its status as the payer of last resort for premiums on the Policies to preserve their liquidation value for the defrauded Investors (as a result of which it will receive Fractional Interests from Continuing Fractional Holders who default in payment of premiums after the Effective Date) or in its capacity as the designated assignee under the Plan for any Fractional Interests included in any Recovered Assets or Fair Funds Except for issuing Position Holder Trust Interests in exchange for any such Fractional Interests Recovered Assets or Fair Funds the Position Holder Trust will not issue any new securities5 The Position Holder Trust will not have authority to make the decision whether or not to allow a Policy to lapse or to sell it without the consent of 100 of any outstanding Fractional Interests in the Policy In order to protect the interests of its beneficiaries

23 Id

24 Section 42 of the PHT Agreement reads in its entirety as follows

Limitations on Trustee The Trustee shall carry out the purposes of the Position Holder Trust and the directions contained herein and shall not at any time on behalf of the Position Holder Trust or the Position Holder Trust Beneficiaries (a) enter into or engage in any business (b) assume any liabilities of any Person or entity other than liabilities of Debtor expressly assumed by the Position Holder Trust as provided in the Plan or (c) take any action requiring the consent of the Trust Board as provided in Section 7 6( c) without first obtaining such consent in accordance with this Position Holder Trust Agreement No part of the Position Holder Trust Assets or the proceeds revenue or income therefrom shall be used or disposed of by the Trustee in furtherance of any business except to the extent necessary to and consistent with the liquidating purpose of the Position Holder Trust The Trustee shall make continuing efforts to liquidate the Position Holder Trust Assets and maximize the distributions to Position Holder Trust Beneficiaries in accordance with the Plan and this Position Holder Trust Agreement make timely distributions and not unduly prolong the duration of the Position Holder Trust

See footnotes 2 and 20 above for more detailed information regarding the likely liquidation activities of the Position Holder Trust

25 Under the Plan Investors who made an election to be a Continuing Fractional Holder but owed money to the Debtors (for premiums or servicing fees) will have up to 90 days after the Effective Date to pay those amounts If these Investors fail to pay such amounts they will be deemed to have made a Position Holder Trust Election instead and the Position Holder Trust will issue additional Position Holder Trust Interests in connection with any such de facto elections The Position Holder Trust will also issue additional Position Holder Trust Interests in exchange for any Fractional Interests included in any Recovered Assets or Fair Funds all of which will be issued to Investors

13 522202 000003 186848634

the Position Holder Trust will have the authority to decide to stop paying its share of premiums on any Policy so long as it gives notice to any holders of Continuing Fractional Interests in that Policy that they will have to take over 100 of the premium obligations on the Policy or it will be allowed to lapse

The sole asset of the IRA Partnership will be its Position Holder Trust Interest and all cash distributions received by the IRA Partnership from the Position Holder Trust will be distributed to its members (ie the holders of IRA Partnership Interests) net of any administrative expenses incurred in connection therewith As discussed above the sole purpose of the IRA Partnership is to serve as a tax blocker or barrier entity for IRA Holders and as a result it will not conduct any trade or business The IRA Partnership also will not conduct any trade or business through the Position Holder Trust because as described above the Position Holder Trust will not conduct any trade or business

No Secondary Market for Securities

The PHT Agreement restricts the Position Holder Trust from listing any of the New Interests on any securities exchange or taking any actions to develop a trading market for the New Interests and the operating agreement of the IRA Partnership (the IRA Partnership Agreement)26 contains similar restrictions with regard to IRA Partnership Interests Moreover the PHT Agreement and the IRA Partnership Agreement will prohibit the Position Holder Trust and the IRA Partnership from acting as a broker or dealer with respect to any New Interests or New IRA Notes or otherwise facilitating accepting any commission or other compensation or collecting and disseminating any information in connection with any trading activities relating to the New Interests or New IRA Notes (other than overseeing maintenance of the transfer register and related processes) 27

Retention of Jurisdiction by the Bankruptcy Court

Under Sections 105(a) and 1142 of the Bankruptcy Code and notwithstanding entry of the Confirmation Order in connection with the Debtors bankruptcy cases and occurrence of the Effective Date the Bankruptcy Court will retain exclusive jurisdiction over all matters arising out of or related to the Debtors bankruptcy cases and the Plan to the fullest extent permitted by law including among other things jurisdiction to hear and determine any matters arising in connection with or relating to (i) the Plan (ii) the Disclosure Statement (iii) the Confirmation Order (iv) the PHT Agreement (v) the IRA Partnership Agreement and (vii) the servicing agreement to be entered into with the Servicing Company or any other contract instrument release or other agreement or document created in connection with the Plan the Disclosure Statement andor the Confirmation Order 28 The Bankruptcy Court will also retain jurisdiction over any request to extend the duration of the Position Holder Trust 29 If mediation does not

26 A copy of the Limited Liability Company Agreement for the IRA Partnership is attached hereto as Exhibit E

27 Plan sect 418(b )

28 Id Article XVII clause G)

29 Position Holder TrustAgreement sect 21

14 522202 000003 186848634

result in an agreed resolution of a dispute (a Holder Dispute) involving a Current Position Holder or a Continuing Position Holder (including a dispute relating to the Policies) such Holder Dispute will be submitted to the Bankruptcy Court for resolution to give effect to the terms of the Plan and the PHT Agreement and the Bankruptcy Court will retain jurisdiction for such purpose30 The PHT Trustee may be removed by an order of the Bankruptcy Court for good cause after application by one or more members of the Trust Board and after notice and a hearing and the Bankruptcy Court will retain jurisdiction for such purpose31

Finite Life of Liquidating Vehicle

The Position Holder Trust will terminate upon the first to occur of the following (a) ten (1 0) years after the Effective Date or (b) upon the liquidation of all of the Policies and the distribution of all of the assets and other properties held by the Position Holder Trust in accordance with the PHT Agreement provided however that the PHT Trustee may extend the duration of the Position Holder Trust one or more times (not to exceed a total of four extensions unless the trustee receives a favorable ruling from the Internal Revenue Service that any further extension would not adversely affect the status of the Position Holder Trust as a grantor trust for federal income tax purposes) for a finite period not to exceed five (5) years for each extension if the assets of the Position Holder Trust have not been liquidated or if the trustee determines that such extension is in the best interests of the Position Holder Trust and the holders of interests therein32 Any extension will require approval from the Bankruptcy Court

Exhibit D to the Disclosure Statement reflects the projected run off rate for the Policies as determined by two different nationally recognized actuarial firms one retained by the Trustee and the other retained by the Committee to double check the analysis conducted by the first Significant distributions are anticipated after the end of the initial ten (1 0)-year period3 and if Policy maturities lag the projections even more of the projected distributions could be pushed out beyond ten (1 0) years Thus depending on economic conditions the persistency of fractional ownership and life settlement market conditions at the time it is likely that it will be in the best interests of the beneficiaries of the Position Holder Trust including the Continuing Fractional Holders to extend the term at least once The way that the Position Holder Trust is structured extending the term is not projected to require any additional fmancing

Periodic Reporting to Beneficiaries

The Position Holder Trust will be subject to the reporting requirements under the Securities Exchange Act of 1934 (the 1934 Act) The Trustees counsel has discussed with the staff of the Corporate Finance Division the question of whether some or all of the securities issued by the Position Holder Trust should be deemed to be automatically registered on the

30 Id sect 46(b)

31 Id sect 63(a)(ii)

32 Id sect 21

33 See Exhibit D to the Disclosure Statement

15 522202 000003 186848634

the Position Holder Trust will have the authority to decide to stop paying its share of premiums on any Policy so long as it gives notice to any holders of Continuing Fractional Interests in that Policy that they will have to take over 100 of the premium obligations on the Policy or it will be allowed to lapse

The sole asset of the IRA Partnership will be its Position Holder Trust Interest and all cash distributions received by the IRA Partnership from the Position Holder Trust will be distributed to its members (ie the holders of IRA Partnership Interests) net of any administrative expenses incurred in connection therewith As discussed above the sole purpose of the IRA Partnership is to serve as a tax blocker or barrier entity for IRA Holders and as a result it will not conduct any trade or business The IRA Partnership also will not conduct any trade or business through the Position Holder Trust because as described above the Position Holder Trust will not conduct any trade or business

No Secondary Market for Securities

The PHT Agreement restricts the Position Holder Trust from listing any of the New Interests on any securities exchange or taking any actions to develop a trading market for the New Interests and the operating agreement of the IRA Partnership (the IRA Partnership Agreement)26 contains similar restrictions with regard to IRA Partnership Interests Moreover the PHT Agreement and the IRA Partnership Agreement will prohibit the Position Holder Trust and the IRA Partnership from acting as a broker or dealer with respect to any New Interests or New IRA Notes or otherwise facilitating accepting any commission or other compensation or collecting and disseminating any information in connection with any trading activities relating to the New Interests or New IRA Notes (other than overseeing maintenance of the transfer register and related processes) 27

Retention of Jurisdiction by the Bankruptcy Court

Under Sections 105(a) and 1142 of the Bankruptcy Code and notwithstanding entry of the Confirmation Order in connection with the Debtors bankruptcy cases and occurrence of the Effective Date the Bankruptcy Court will retain exclusive jurisdiction over all matters arising out of or related to the Debtors bankruptcy cases and the Plan to the fullest extent permitted by law including among other things jurisdiction to hear and determine any matters arising in connection with or relating to (i) the Plan (ii) the Disclosure Statement (iii) the Confirmation Order (iv) the PHT Agreement (v) the IRA Partnership Agreement and (vii) the servicing agreement to be entered into with the Servicing Company or any other contract instrument release or other agreement or document created in connection with the Plan the Disclosure Statement andor the Confirmation Order 28 The Bankruptcy Court will also retain jurisdiction over any request to extend the duration of the Position Holder Trust 29 If mediation does not

26 A copy of the Limited Liability Company Agreement for the IRA Partnership is attached hereto as Exhibit E

27 Plan sect 418(b )

28 Id Article XVII clause G)

29 Position Holder TrustAgreement sect 21

14 522202 000003 186848634

result in an agreed resolution of a dispute (a Holder Dispute) involving a Current Position Holder or a Continuing Position Holder (including a dispute relating to the Policies) such Holder Dispute will be submitted to the Bankruptcy Court for resolution to give effect to the terms of the Plan and the PHT Agreement and the Bankruptcy Court will retain jurisdiction for such purpose30 The PHT Trustee may be removed by an order of the Bankruptcy Court for good cause after application by one or more members of the Trust Board and after notice and a hearing and the Bankruptcy Court will retain jurisdiction for such purpose31

Finite Life of Liquidating Vehicle

The Position Holder Trust will terminate upon the first to occur of the following (a) ten (1 0) years after the Effective Date or (b) upon the liquidation of all of the Policies and the distribution of all of the assets and other properties held by the Position Holder Trust in accordance with the PHT Agreement provided however that the PHT Trustee may extend the duration of the Position Holder Trust one or more times (not to exceed a total of four extensions unless the trustee receives a favorable ruling from the Internal Revenue Service that any further extension would not adversely affect the status of the Position Holder Trust as a grantor trust for federal income tax purposes) for a finite period not to exceed five (5) years for each extension if the assets of the Position Holder Trust have not been liquidated or if the trustee determines that such extension is in the best interests of the Position Holder Trust and the holders of interests therein32 Any extension will require approval from the Bankruptcy Court

Exhibit D to the Disclosure Statement reflects the projected run off rate for the Policies as determined by two different nationally recognized actuarial firms one retained by the Trustee and the other retained by the Committee to double check the analysis conducted by the first Significant distributions are anticipated after the end of the initial ten (1 0)-year period3 and if Policy maturities lag the projections even more of the projected distributions could be pushed out beyond ten (1 0) years Thus depending on economic conditions the persistency of fractional ownership and life settlement market conditions at the time it is likely that it will be in the best interests of the beneficiaries of the Position Holder Trust including the Continuing Fractional Holders to extend the term at least once The way that the Position Holder Trust is structured extending the term is not projected to require any additional fmancing

Periodic Reporting to Beneficiaries

The Position Holder Trust will be subject to the reporting requirements under the Securities Exchange Act of 1934 (the 1934 Act) The Trustees counsel has discussed with the staff of the Corporate Finance Division the question of whether some or all of the securities issued by the Position Holder Trust should be deemed to be automatically registered on the

30 Id sect 46(b)

31 Id sect 63(a)(ii)

32 Id sect 21

33 See Exhibit D to the Disclosure Statement

15 522202 000003 186848634

result in an agreed resolution of a dispute (a Holder Dispute) involving a Current Position Holder or a Continuing Position Holder (including a dispute relating to the Policies) such Holder Dispute will be submitted to the Bankruptcy Court for resolution to give effect to the terms of the Plan and the PHT Agreement and the Bankruptcy Court will retain jurisdiction for such purpose30 The PHT Trustee may be removed by an order of the Bankruptcy Court for good cause after application by one or more members of the Trust Board and after notice and a hearing and the Bankruptcy Court will retain jurisdiction for such purpose31

Finite Life of Liquidating Vehicle

The Position Holder Trust will terminate upon the first to occur of the following (a) ten (1 0) years after the Effective Date or (b) upon the liquidation of all of the Policies and the distribution of all of the assets and other properties held by the Position Holder Trust in accordance with the PHT Agreement provided however that the PHT Trustee may extend the duration of the Position Holder Trust one or more times (not to exceed a total of four extensions unless the trustee receives a favorable ruling from the Internal Revenue Service that any further extension would not adversely affect the status of the Position Holder Trust as a grantor trust for federal income tax purposes) for a finite period not to exceed five (5) years for each extension if the assets of the Position Holder Trust have not been liquidated or if the trustee determines that such extension is in the best interests of the Position Holder Trust and the holders of interests therein32 Any extension will require approval from the Bankruptcy Court

Exhibit D to the Disclosure Statement reflects the projected run off rate for the Policies as determined by two different nationally recognized actuarial firms one retained by the Trustee and the other retained by the Committee to double check the analysis conducted by the first Significant distributions are anticipated after the end of the initial ten (1 0)-year period3 and if Policy maturities lag the projections even more of the projected distributions could be pushed out beyond ten (1 0) years Thus depending on economic conditions the persistency of fractional ownership and life settlement market conditions at the time it is likely that it will be in the best interests of the beneficiaries of the Position Holder Trust including the Continuing Fractional Holders to extend the term at least once The way that the Position Holder Trust is structured extending the term is not projected to require any additional fmancing

Periodic Reporting to Beneficiaries

The Position Holder Trust will be subject to the reporting requirements under the Securities Exchange Act of 1934 (the 1934 Act) The Trustees counsel has discussed with the staff of the Corporate Finance Division the question of whether some or all of the securities issued by the Position Holder Trust should be deemed to be automatically registered on the

30 Id sect 46(b)

31 Id sect 63(a)(ii)

32 Id sect 21

33 See Exhibit D to the Disclosure Statement

15 522202 000003 186848634

Effective Date of the Plan (by virtue of the facts of this case which are that (i) the Position Holder Trust will be a successor-in-interest to the Debtors with regard to legal ownership of the Policies and management and administration of the common enterprise related to the Policies that the Texas Supreme Court has ruled exists among LPI and the Investors who purchased the outstanding Fractional Positions34 and (ii) all of the new securities to be issued under the Plan will be issued to those Investors in exchange for their claims against and investments in the Debtors relating to those Fractional Positions) In any event all of the securities will be registered under the 1934 Act (to the extent required) and periodic reports will be provided to all holders ofNew Interests and New IRA Notes

Not Holding Itself Out as an Investment Company

Neither the Position Holder Trust nor the IRA Partnership will hold itself out as an investment company As noted above the Position Holder Trust will be formed and will act as a liquidating trust for the Policies and the IRA Partnership will be formed as part of the Plan solely to serve as a tax blocker or barrier entity for IRA Holders

III Conclusion

For the reasons set forth herein we respectfully request that the Staff confirm to us that it will not recommend that the SEC take action against the Position Holder Trust or the IRA Partnership if neither the Position Holder Trust nor the IRA Partnership registers as an investment company under the 1940 Act in reliance on the exemptions in Sections 7(a) and 7(b) of the 1940 Act for transactions which are merely incidental to the dissolution of an investment company

34 Life Partners Inc v Arnold 464 SW3d 660 (Tex 2015)

16 522202 000003 186848634

We appreciate your consideration of this request and look forward to further discussion with you if that would be helpful to you Please do not hesitate to contact me or Harry Pangas of Sutherland Asbill amp Brennan LLP at 2023830805 if we may provide any additional information or assistance in any regard If for any reason you have any concerns regarding your ability to grant this request we would appreciate the opportunity to discuss the matter with you prior to your issuance of any negative response

cc Harry S Pangas Esq Sutherland Asbill amp Brennan LLP

17 522202 000003 186848634

Exhibit A

The Plan

A-1 522202 000003 186848634

Exhibit B

Disclosure Statement

B-1 522202 000003 186848634

Exhibit C

Position Holder Trust Agreement

[See Exhibit A to the Plan]

C-1 522202 000003 186848634

Exhibit D

IRA Partnership Agreement

D-1 522202 000003 186848634

We appreciate your consideration of this request and look forward to further discussion with you if that would be helpful to you Please do not hesitate to contact me or Harry Pangas of Sutherland Asbill amp Brennan LLP at 2023830805 if we may provide any additional information or assistance in any regard If for any reason you have any concerns regarding your ability to grant this request we would appreciate the opportunity to discuss the matter with you prior to your issuance of any negative response

cc Harry S Pangas Esq Sutherland Asbill amp Brennan LLP

17 522202 000003 186848634

Exhibit A

The Plan

A-1 522202 000003 186848634

Exhibit B

Disclosure Statement

B-1 522202 000003 186848634

Exhibit C

Position Holder Trust Agreement

[See Exhibit A to the Plan]

C-1 522202 000003 186848634

Exhibit D

IRA Partnership Agreement

D-1 522202 000003 186848634

Exhibit A

The Plan

A-1 522202 000003 186848634

Exhibit B

Disclosure Statement

B-1 522202 000003 186848634

Exhibit C

Position Holder Trust Agreement

[See Exhibit A to the Plan]

C-1 522202 000003 186848634

Exhibit D

IRA Partnership Agreement

D-1 522202 000003 186848634

Exhibit B

Disclosure Statement

B-1 522202 000003 186848634

Exhibit C

Position Holder Trust Agreement

[See Exhibit A to the Plan]

C-1 522202 000003 186848634

Exhibit D

IRA Partnership Agreement

D-1 522202 000003 186848634

Exhibit C

Position Holder Trust Agreement

[See Exhibit A to the Plan]

C-1 522202 000003 186848634

Exhibit D

IRA Partnership Agreement

D-1 522202 000003 186848634

Exhibit D

IRA Partnership Agreement

D-1 522202 000003 186848634